The desire to entertain ourselves during the pandemic triggered a boom in online gaming and gambling across the world. The sector is growing by more than 10% a year and is expected to be worth US$127 billion by 2027. Much of that growth will be in Africa, fuelled by investment in high speed internet across the continent, the increasing affordability of smartphones, and a young population.

This is great news for the growing number of online gaming and gambling companies operating in Africa, but also a risk. As the sector booms, and its profile grows, it will inevitably attract the interest of both regulators and fraudsters.


The risks that operators face

Online gaming and gambling operators worldwide face a specific set of challenges in managing the risks around their business. Many of these are exacerbated by the regulatory and business landscape in Africa. Challenges for operators in Africa include:

Customer identity and onboarding

Establishing and verifying the true identity and location of players is essential for operators (in order, for example, to establish that players opening accounts are resident in the country of operation) but particularly challenging in Africa. In some countries as much as 45% of the population may not have a formal ID document and it is common practice for operators to ask only for an email address and password at onboarding.

Combatting fraud

Bonus fraud – where fraudsters register multiple accounts in order to claim bonus incentives – is a common problem in online gambling. Lower currency values in Africa mean that individual frauds are generally less financially damaging than in the US or Europe, but losses can quickly accumulate. Credit card fraud, identity theft and chargeback fraud, either from fraudsters using stolen cards or legitimate customers falsely claiming that their card was stolen in order to claim money back, are also significant problems in the sector.

Responsible gambling obligations

As the use of online gambling sites has increased, so have incidences of self-exclusion; Gamstop, the UK’s self-exclusion scheme, saw a 21% rise in self-exclusions in just one month during the pandemic. Meeting responsible gaming obligations is particularly challenging in Africa because there is little coordination between countries and regulatory boards that would help operators identify self-excluded players. Individuals who have self-excluded themselves from gambling under the South African Responsible Gambling Foundation’s National Responsible Gambling Programme cannot take part in any gambling activity for a minimum of six months. In most cases it is the player’s responsibility to comply with the terms of self-exclusion but there is growing momentum worldwide for operators to be held legally liable to ensure that excluded players do not resume gambling by setting up a new account.

Money laundering

Money launderers are increasingly drawn to the gambling sector, as it offers the possibility to obscure the source of funds – by storing money in a gambling account, for example, or collaborating with other criminal players, or through player-to-player transfers. This is why the Financial Action Task Force (FATF), which develops policies to combat money laundering and terrorism financing worldwide, has required physical casinos to apply its anti-money laundering (AML) and counter terrorism financing (CFT) guidelines for years – and is now turning its attention to online gaming and ‘virtual asset service providers’. We look at this more closely, and the implications for operators in Africa, here.

How tech can help

Online gaming and gambling operators in Africa are turning to automated solutions to help them manage these risks. Sophisticated and affordable tech-based solutions are available to help operators protect their business and reputation, without damaging the experience of legitimate customers.
An effective and efficient solution has three elements:

  • A risk-based approach that assesses the riskiness of each customer and transaction
  • Technology that provides transparency around the devices that are used to access and create accounts, and the location of users
  • Behavioural analytics and machine learning solutions that flag suspicious transactions and activity.

Our LexisNexis® ThreatMetrix® solution is used by more than 5,000 global brands worldwide to establish and authenticate digital identity. Our tools allow operators to establish where each user is located and their true IP address, even if a VPN or other cloaking method is being used. The device being used to make a transaction can be identified – each device has hidden identifiers that provide a unique fingerprint – allowing multiple accounts that have been opened from the same device to be flagged.