Blockchain Tools: Detect Illegal iGaming Transactions

Digital assets keep spreading in the entertainment industry, and the need for reliable tools to control monetary transfers has also increased.

Distributed ledger-based analytics help to check the purity of deposited and withdrawn funds, build charts of interactions between players, identify suspicious activity, and prevent cases of fraud.

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About the Concept

This is a technology that allows entrepreneurs to track the origin and path of digital assets through the analysis of public blockchain details.

The solution can be used for several purposes:

1. De-anonymisation of wallets. It means their comparison with known exchanges and other public registries.
2. Identification of black money. Here, the focus is on transfers related to sanctioned addresses, darknet sites, illegal cash withdrawal, or hacker attacks.
3. Risk assessments. Such tools help classify operations by the degree of suspicion. There are 3 levels: low, medium, or high.

The first tools for analysing distributed ledger chains appeared in the 2010s due to the rapid rise in the popularity of crypto. After 2015, this technology began to be used not only by large exchanges, but also, for example, by financial organisations or well-known tech companies.

The mass implementation of these methods occurred in the 2020s, partly due to legislative updates in regulated markets.

For example, since 2024, the MiCA rules have obliged all European entrepreneurs to track the source of crypto assets. The requirements apply to exchanges, betting projects, FinTech brands, and other legal entities using digital funds.

Distributed Ledger Tools in Gaming

The use of virtual currency is a long-term trend in the casino and sports betting industry.

This method is characterised by maximum convenience and high speed, but also creates new risks for bookmakers. These are money laundering, circumvention of sanctions, financing illegal activities, multi-accounting, etc.

To protect themselves from fines and reputational losses, business owners are increasingly turning to blockchain analytics. This tool allows them to control cryptocurrency flows, as well as minimise regulatory, economic, and reputational threats.

Deposits and Withdrawal Checking

Each transaction in the distributed ledger-based environment is transparent and recorded in the public registry, thanks to which entrepreneurs can:

1. Determine the source of digital assets. It is important to understand where virtual funds came from. This can be either a clean wallet or a suspicious source (darknet, hacked accounts, or mixers).
2. Filter high-risk operations. Additional verification is launched if, for example, a deposit comes from an account associated with sanctions or cybercrime.
3. Prevent blocking by banks. Working with clean money increases the trust of financial partners, making the betting business more competitive and profitable.

Generation of User Graphs

The technology makes it possible to trace the links between addresses and transfers.

For gaming, this function is especially important, since it helps to:

1. Detect multi-accounting. This is a situation when one client creates dozens of profiles. In this way, he gets an unfair advantage in the game or abuses bonuses.
2. Identify hidden groups of players. As a rule, several scammers simultaneously place bids, drop chips or cards, and withdraw funds from entertainment portals.
3. Identify connections with underground exchangers. Cooperation with such enterprises is illegal and often leads to the blocking of the betting site.

Automated Scoring

Modern systems work in real time and assign a level of threat to each transfer:

1. High. This is received by the addresses associated with darknet markets, mixers, and sanction lists.
2. Medium. These are new wallets with no history, but with above-average activity.
3. Low. This is about transactions from verified exchanges and profiles with a clean history.

Entrepreneurs can automatically block suspicious payments or send them for additional verification to the special department. Thanks to this, the risk of falling under AML fines and other sanctions is reduced.

Compliance and Audit

The authorities increasingly require that operators working with crypto confirm the origin of players' funds. Ignoring this requirement may result in the revocation of a permit and lead to huge reputational losses.

The technology allows project owners to:

• quickly create reports for banks, auditors, and regulators;
• clearly demonstrate the origin of money;
• confirm the legality of the betting business.

The implementation of the tool increases the chances of obtaining permits in prestigious jurisdictions, reduces the risks of inspections, and provides access to international markets.

Commercial and Open-Source Services

Let us consider what solutions can be used to detect problematic transactions and clients who conduct them.

Paid Products

The most in-demand options in the industry include:

1. Chainalysis. This is a recognised leader in the blockchain sector. The service is actively used in the government, banks, and crypto exchanges. It has a rich database and the ability to track risky addresses in real-time.
2. Elliptic. It specialises in AML control and compliance audit. It can be easily integrated with financial gateways. Due to this, the tool is in great demand among providers working with crypto and fiat currencies.
3. TRM Labs. The solution focuses on behavioural analytics and graphing complex transactions. It will be useful for identifying multi-accounting and manipulations with bonuses.
4. Scorechain. This product is focused primarily on the European market. It is approved by EU regulators and complies with the requirements of the AMLD 6.
5. Crystal Blockchain. It integrates well with corporate systems and supports deep forensic analysis to investigate fraudulent activities.

The above-mentioned platforms provide a convenient API toolkit. With its help, bookmakers can automatically check each deposit and withdrawal, as well as generate reports for regulators.

Open-Source Services

A striking example of such a program is GraphSense. This is a free product developed for researchers and analysts. It allows entrepreneurs to create transaction graphs and find hidden connections between wallets.

This solution and other similar services are used for scientific research, by small operators, and in cases where the budget of an entertainment project is limited.

However, open-source services do not have such an extensive database of labelled addresses as, for example, Chainalysis or Elliptic. For this reason, they are often used as an addition to the main commercial products.

Legal Aspects of Regulation

Leading iGaming markets increasingly require casino owners to use tools based on a distributed ledger. This is due to the growing popularity of crypto-friendly platforms. The purpose of such innovations is full AML/CFT control, protection of bettors, and prevention of money laundering.

United Kingdom

The UK Gambling Commission is considered one of the strictest in the world.

UKGC demands in the context of the application of technology include:

1. Full AML and KYC control. Each crypto transaction must be checked in the context of the source of funds.
2. Real-time monitoring. Vendors are obliged to track all deposits and withdrawals through distributed ledger tools. It is possible to use Chainalysis, Elliptic, and other services.
3. Verification of the “purity” of income. When requested by the regulator or bank, entrepreneurs must provide a report confirming that players’ earnings are not associated with mixers, darknet, or sanctioned addresses.
4. Deposit limits and customer protection. The updated UKGC rules oblige operators to introduce personalised limits and notify gamblers about the risks of placing bets in cryptocurrency.

Without blockchain analytics, businessmen simply will not be able to pass the UKGC audit. The tool’s application, on the contrary, will facilitate the functioning of the entertainment site, making it safer and legal.

Malta

The island state is traditionally considered a hub for virtual casinos and eSports.

Let us consider the MGA regulatory framework:

1. DLT Sandbox Framework. Malta was the first in Europe to introduce a legitimate “sandbox” for operators using distributed ledger registries. It allows providers and fintech companies to legally test and implement blockchain products before obtaining a full licence.
2. AML & Fair Play Compliance. iGaming portals are required to check the sources of cryptocurrency and prevent multi-accounting schemes.
3. Reporting to banks and the regulator. The implementation of blockchain analytics helps project owners quickly generate reports for MGA and PSP services.

To maintain a Maltese certificate, entrepreneurs are required to document their work with digital assets and connect software that will block anonymous transfers.

USA

In this country, the regulation of crypto bids is associated with AML laws.

Key points of the legal norms:

1. Bank Secrecy Act (BSA). The document obliges businessmen to check all crypto transactions for AML/CFT compliance.
2. Travel Rule (FATF Recommendation 16). For money transfers above the established limit, vendors must provide information about the sender and recipient (originator and beneficiary data). The rule applies to both fiat and crypto operations.
3. OFAC Sanctions Lists. Transactions associated with sanctioned addresses must be immediately blocked.

Without integration with Chainalysis, Elliptic, or other services, the bookmaker will not be able to work with banks or obtain permission in regions where sports betting is allowed. The presence of distributed ledger tools can simplify and speed up the management of digital assets.

The Main Things about the Concept in Gaming

Nuances that should be taken into account:

• The solution makes it possible to check deposits or withdraw funds 24/7, create interaction graphs, identify problem players and fraudsters, etc. Analytical services simplify risk assessment, compliance, and audit of gaming firms.
• Entrepreneurs can use both open-source services and paid commercial products. The second option looks preferable since it gives access to a wide range of useful mechanisms and settings.
• The use of the tool is regulated at the legislative level. The authorities of the UK, Malta, the US, and other jurisdictions oblige operators to undergo compliance procedures and monitor transactions. It is almost impossible to meet these requirements without special software.

We offer program components for betting portals, White Label projects, fantasy sports, and eSports products. From us, you can also order payment systems, security software, and blockchain-based betting options.

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