Gambling organizations have always relied on speed and accuracy. Trust has always been important. What’s changed is the volume. Every second of every day, online gambling platforms are processing thousands of transactions, tracking hundreds of points of player behavior, and making automatic decisions based on AI algorithms that impact millions of dollars in revenues and player experiences. The challenge with that evolution is a whole new level of cyber risk and exposure that most organizations have been scrambling to understand.
Consumer privacy laws like CCPA are also changing the expectations customers have for how their personal data is collected, processed, and secured. In gambling, that challenge extends to the fundamentals of how platforms are built, how AI models are trained, and how security programs get funded and approved.
Understand the Risk: Why Gambling Orgs are a Target
Continuous financial transactions, sensitive personal and identity data, system uptime – gambling organizations have something that attackers want and will interrupt their service to obtain it. Processing large wagering volumes also means that gambling platforms are storing much more personal data than ever before. Name, address, identification docs, payment records, geolocation, behavior data, betting history – you name it. Modern casinos are keeping it, which means cybercriminals and fraud operations will target them.
Recent data breaches involving third-party providers and exploits targeting platform vulnerabilities have put player identities, betting history, and account records at risk across the iGaming sector. Attackers can use this information to target players through phishing emails and account takeover schemes, even if credit card numbers and bank account info are spared.
Ransomware and distributed denial-of-service (DDoS) attacks also present significant threats. During major sporting events, uptime is paramount to revenue generation and regulatory compliance, which makes these organizations high-value targets.
How AI is Making Things Riskier (& Better)
Gambling orgs aren’t just coming up against new threats because of advanced tech; they are also using it to accelerate innovation.
Artificial intelligence is being used to:
- Monitor transactions and identify fraudulent behavior
- Support anti-money laundering initiatives
- Build player risk profiles for self-exclusion and responsible gambling efforts
- Calculate odds and run trading algorithms
- Verify player identities for KYC compliance
- Power marketing personalization
Advancing every one of these initiatives requires a tremendous amount of data flowing through distributed systems. As organizations adopt AI for these use cases, they open themselves up to new vulnerabilities.
Just look at AI itself. Attackers are finding ways to poison the models that gambling companies rely on through data manipulation, adversarial inputs, and tainted training processes. If compromised at the model level, fraud monitoring systems can become less effective at detecting threats, while game outcomes and payout algorithms can be impacted.
Attackers are also taking advantage of AI to launch attacks. Credential stuffing, phishing, and automated account takeover attacks are being scaled at record rates and elevated success rates using AI-powered automation.
CCPA Compliance Considerations for Gambling Enterprises
The digital transformation of gambling doesn’t make organizations exempt from CCPA. In fact, quite the opposite. With recent amendments further expanding CCPA definitions, organizations falling into the CCPA’s scope will be required to:
- Maintain comprehensive data inventories
- Manage CCPA consumer rights requests
- Disclose use of automated decision-making
Conduct cybersecurity audits and privacy risk assessments for high-risk processing activities.
Operations powering gambling platforms fall into many of these high-risk categories mentioned above. AI-driven personalization, player profiling, and behavior analysis all increase the risk score of your data processing activities.
What this means is organizations must be able to show regulators their risk management and security practices are reasonable, given the nature of their businesses. Without that, they could be exposed to regulatory penalties, litigation, and brand damage.
3rd Party Risk, Data Breaches, and Why They Are Costing Millions
Most gambling operations rely on some level of third-party vendors, whether that’s for payment processing, identity verification, odds feeds, or even infrastructure as a service/cloud solutions once a compromise at a third-party has led to breaches impacting multiple gambling operations.
Earlier this year, a breach traced back to a third-party exposed user identities across multiple online platforms. Because many of these companies share infrastructure, attackers only had to exploit one system to access multiple customer databases.
Supply chain attacks are another area of risk that overlaps with third-party dependencies. Attackers are increasingly targeting VPNs and remote access tools as a pathway to multiple companies using the same provider.
How is AI Reshaping Risk and Cybersecurity for the Gambling Industry?
Building a “Reasonable Security” Program
Cybersecurity is a shared responsibility. Vendors, users, and platforms themselves all need to take responsibility for securing systems. However, regulators and insurers don’t want to hear that. They want to know what YOUR organization is doing to manage cyber risk.
That means:
- Conducting risk assessments that are tied to business impact
- Documenting security decisions
- Validating security controls are configured correctly
- Monitoring high-risk accounts with strong identity verification
- Having an incident response plan (IRP) that covers game manipulation, player balance disputes, and odds/risk calculation discrepancies
How the Online Gaming and Gambling Industry Can Reduce the Odds of Cyberattacks
Managing third-party risks through contractual agreements and regular audits
Incident response for gaming operators isn’t just about notification and disclosure. There are regulatory considerations around the fairness of games and player funds that require coordination with regulators and stakeholders after a breach.
No more checking the box for compliance. It’s time to tie your cybersecurity program to a risk methodology that prepares you for lawsuits, audits, and technical vulnerabilities.
AI + Compliance + Cyber Risk: What’s Next?
The gambling industry finds itself at a unique intersection of rapid AI adoption, financial crime risk, and increased regulatory attention. As players turn to the web for their gambling needs, organizations will face greater pressure to:
- Validate their use of AI for fairness
- Disclose how AI is being used to automate decisions
- Protect this information from advanced threat actors
Advancements in technology are only going to increase the speed and frequency of attacks. Unfortunately, cybersecurity isn’t advancing at the same rate. It’s no longer enough to deploy security tools and hope for the best. The future of cybersecurity lies in managing cyber risk through a structured framework that can adapt to growing threats.
Conclusion
Every gambling organization wants what’s best for its players. Stopping cyberattacks won’t be easy, but there are risk-based solutions that can help.
At HALOCK, our Duty of Care Risk Analysis (DoCRA) works with organizations to evaluate their cybersecurity programs against a risk methodology. Not only does this make your security program more defensible against regulators, but it also helps align spending with true cyber risks.
With so much new risk introduced through AI, getting a handle on what’s reasonable security will set your organization up for success tomorrow and decades into the future.
Review Your AI Security and Risk Posture
Review Your CoPilot Security Position
Read more AI (Artificial Intelligence) Risk Insights
Webinar A Practical Guide to Governing Native AI, Browser-Based AI, and Third-Party AI Tools
