In a competitive industry like sports betting, capturing a fresh audience requires creative tactics and incentives. To drive first-time deposits (FTDs), sportsbooks are heavily investing in pay-per-click (PPC) campaigns. These campaigns are an effective way to draw in new users by offering promotions such as free bets or deposit bonuses. However, bonuses have attracted a new wave of fraud.
TrafficGuard’s new research based on campaign data of over 100 sportsbooks shows that up to 44% of the traffic for the largest operators in the industry is fraudulent or invalid. Smaller sportsbooks face a similar uphill battle, as a range of 33%-42% of their traffic can be attributed to invalid clicks.
Advancements in artificial intelligence (AI) have enabled bad actors to abuse bonuses using AI-powered bots. Despite sportsbooks employing sophisticated tools during platform registration and identification to filter bonus abuse, these bots generate non-genuine clicks that inflate paid media spend without delivering authentic engagement or genuine new players. New user acquisition is a critical metric for sportsbooks, and a decline in legitimate FTDs significantly impacts revenue.
Fraudsters cheating the system
One-time promos on keywords like bonus bets and free spins are designed to attract new players, but broad keyword targeting often opens the door to abuse. Bad actors use bots to exploit these offers, creating fake accounts to claim promotions at scale.
Bots have advanced to the point where they can accurately mimic human behaviour and carry out repetitive tasks. This allows them to rapidly generate new accounts, taking advantage of promotions to the detriment of sportsbooks’ budgets. Bot networks like this are responsible for nearly 40% of click fraud, according to FraudLogix.
When bots repeatedly click on paid ads, it drives up ad revenue for the publisher while simultaneously increasing overall customer acquisition costs (CACs). When the budget runs out, the campaign is taken down. As these bots don’t stick around to make a real conversion, sportsbooks take a hit to their profits. This problem is made worse as genuinely interested users miss out being served the ad placement for the bonus, causing a loss of potential players.
Sportsbooks are generally unaware fraud is occurring, as bots can conceal themselves. Bad actors achieve this by carrying out attacks from a hosting server, using a residential Internet Service Provider (ISP) proxy. Proxies let bad actors hide their location by routing their connection through a different server. Then the bad actor is free to enter online services disguised as a legitimate user. To cover their tracks, scripted bots will then delete their cookies after they’ve finished the attack, rinse and repeat.
Funds meant for recruiting new users are being directed at bots that deliver no genuine value for sportsbooks, causing a significant waste of resources.
The impact extends to future campaigns as well, as fraudulent traffic results in inaccurate performance metrics. Ad campaigns will be flooded with false positive click-through results with bots at the source. Sportsbooks will mistakenly see the campaign as a success and direct more funds toward it, setting them up for future losses.
Countering sophisticated bots
To counter hits to budgets, sportsbooks need to take action. Bots have become increasingly sophisticated, and legacy fraud tools can struggle to differentiate between them and legitimate traffic. To address this, sportsbooks should take a much more active role in monitoring their traffic.
Bots may be able to mimic human behaviour, but this doesn’t mean they can’t be spotted. Their goal is typically to grab a bonus and swiftly exit the website, leading to high bounce rates. Coupled with unusually high click rates or abnormal traffic spikes, these bounce rates are a sign that fraud is taking place. By closely monitoring activity on the site, sportsbooks can identify and block bots before they can interfere with campaigns.
To combat the growing number of fake accounts created by bots, sportsbooks should implement robust identity verification as part of the sign-up process. By requiring users to verify their identity, bad actors are prevented from creating multiple accounts and abusing promotional offers.
Another way that sportsbooks can take a stand is to deploy an ad fraud tool that detects non-human clicks after the first interaction. These tools identify and exclude bot traffic immediately, ensuring that future ads are not served to fraudulent accounts and protecting the investment in paid media. Coupling this with in-platform registration filtering helps ensure that only legitimate users are able to interact with promotions, reducing the impact of ad fraud and optimising media spend.
Protecting profits
The popularity of sports betting is soaring with the introduction of on-the-go betting. Mobile apps and online casinos have opened the doors to a new, tech-savvy audience. However, new opportunities come with new challenges, as digitalisation has also provided bad actors with advanced tools. Sportsbooks can’t truly maximise their revenue while bots are working to undermine them.
It’s crucial that sportsbooks combat bad actors before the damage is done to budgets. Analysing traffic more closely will allow sportsbooks to highlight any potential fraud and protect their investments. With a strategy in place, sportsbooks can ensure their promotions are saved for real players.
Chad Kinlay is chief marketing officer at TrafficGuard, a digital ad verification and fraud prevention platform.
