Chip Dumping

Chip dumping is relatively complex because it involves layering multiple deceptive practices, including:

1. Creating multiple accounts. The fraudster creates many accounts using different identities, including stolen data or credentials that belong to their family members. Extra tools like bots, VPNs or proxies can be used as well to avoid detection (since this is not allowed by gambling operators). 
2. Deliberately losing chips. The criminal joins a game and loses to another player who is the second known recipient involved in the scheme. Other genuine players aren’t aware of this scam. Sometimes, a third account might be used to further obscure this type of fraud.
3. Cashing out the winnings. The scammer becomes the “winning” player. They cash out their winning and transfer the funds to themselves, meeting requirements but actually deceiving the gaming platform.

In general, fraudsters can exploit chip dumping for both bonus abuse and money laundering, including other schemas, such as royalty program manipulation.

All fraudulent activities in iGaming are a threat to general security and integrity of the platform. Fraudsters spread like wildfire and they often are known to engage in multiple illicit activities at once. For instance, chip dumping is often paired with matched betting, bonus abuse, etc. Beyond negative effects like lost funds and reputational damage, chip dumping degrades the gaming experience for honest players. Victims who fall into scams on a gambling platform might take their funds elsewhere and are less likely to return. 

Chip dumping has two main use cases, which, from the fraudster’s perspective, include either bonus abuse or money laundering. 

Bonus abuse is also linked to multiple account fraud, which is used to access free benefits that are only intended for new players. In the meantime, money laundering happens when criminals use chip dumping to transfer illicit funds between accounts, obscuring the money trail and making it appear legitimate. They use their online gaming accounts as standard bank accounts to drop the dirty cash. That said, bonus abuse isn’t illegal, but it goes against most platforms’ Terms and Conditions. Money laundering is illegal.

Let’s say that a player is entering a poker tournament with four other players (in this case, accomplices). The first player is their leader, and all other remaining players who agreed to be involved in the chip dumping scheme intentionally lose chips to their leader when they are at their poker table. This allows the main player to win without risk, building a large stack without risk. Experienced fraudsters manage to disguise their moves by making plays that align with the general poker strategy. 

Fraud prevention measures, such as monitoring user behavior, are vital to identify illicit gaming practices and prevent them from happening.  

The most popular fraud prevention solutions for iGaming scams, including chip dumping, include:

• Identity verification. Verifying player identities during the account registration process helps ensure customers are legitimate and not engaging in fraud, such as multi-accounting. Suspicious players can also be asked to re-verify themselves before atypical behavior, such as large transactions. 
• Suspicious pattern monitoring. Flagging unusual losses to the same opponent or detecting the same IP address among a batch of accounts can help identify chip dumping in real time.

In general, using various AI tools helps gambling platforms with data analysis, which then assists them in getting used to new fraud types and aligning new measures to prevent fraud both at the onboarding stage and later once the player has their account activated. 

That’s important because genuine players can develop malicious tendencies and become high-risk, which means extra due diligence and fraud prevention measures are vital. This is standard practice for Anti-Money Laundering (AML) compliance, which is mandatory for iGaming and gambling companies since they are considered to be prone to money laundering and other similar financial crimes. 

If the platform catches you engaging in chip dumping, you might:

• Lose all your funds.
• Have your account closed. 
• Become permanently banned from the platform. 
• Receive a warning (if it’s a first-time offense).