Fraudsters are taking a bigger bite out of the online gambling world, according to a new report from TransUnion, which found the gambling sector in America was the prime target for digital fraud schemes in 2023.

TransUnion’s study revealed the gambling industry, covering sports betting sites, online casinos and online poker, had the highest rate of suspected digital fraud in the U.S. last year at 10.9%. That’s up from 9% from 2022 and higher than any other business, even outpacing retail fraud, traditionally the “leader” in this world. 

The most common type of fraud in gambling was promotion abuse, according to the study.

The report highlighted synthetic identity fraud as the fastest-growing type of digital fraud globally, rising 14.2% year-over-year. Synthetic identities are fabricated or stolen identities used by fraudsters. TransUnion determined lender exposure to suspected synthetic identities for U.S. auto loans, bank credit cards, retail credit cards, and unsecured personal loans reached $3.1 billion by the end of 2023, a 63% increase since 2020.

Data breaches

“This early phase new account digital fraud may represent a paradigm shift of sorts among fraudsters,” Steve Yin, senior vice president and global head of fraud solutions at TransUnion, said in a press release. “In lieu of using traditional tactics to gain access to and ultimately compromise existing accounts, they are increasingly choosing to create new accounts that they can control themselves. These fraudsters leverage synthetic identities assembled in large part through the use of credentials gathered as a result of one or multiple data breaches.” 

Data breaches may have contributed to the surge in suspected fraudulent accounts and synthetic identities. The number of data breaches in the U.S. increased by 157% from 2020 to 2023, and the average breach risk severity rose 11% year-over-year to the highest level ever measured.

The study found nearly 14% of newly created global digital accounts were suspected of digital fraud in 2023, potentially indicating a shift in tactics by fraudsters to engage earlier in the transactional process.

TransUnion’s report was based on proprietary insights from its global intelligence network and identity and fraud product suite, TransUnion TruValidate.

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