Geolocation Fraud and Proxy Betting: Challenges for Sportsbooks

Sports betting has expanded rapidly across the globe in recent years, driven by new regulations and technology that make wagering easier than ever. In this regulated environment, maintaining the integrity of sports wagering is paramount. Yet alongside the growth of legal betting, sportsbooks face sophisticated forms of fraud that exploit location-based restrictions. Two prominent challenges are geolocation fraud and proxy betting, which threaten to undermine regulatory compliance, sports integrity, and the risk management frameworks of betting operators.

Geolocation fraud refers to attempts by bettors to deceive or bypass the technological measures that verify a customer’s physical location. Proxy betting involves someone placing a wager on behalf of someone else, effectively sidestepping rules that require the actual bettor’s presence or eligibility. Both practices can occur in land-based venues and on digital platforms, and both can lead to serious operational, financial, and legal repercussions for operators. In this article, we will examine what constitutes geolocation fraud and proxy betting, explore real-world examples from North America, Europe, and the Asia-Pacific region, and analyze why these activities pose such a significant problem for regulated sportsbooks. We will also discuss how fraudsters carry out these schemes – from VPNs and fake locations to collusive syndicates – and highlight the expectations of regulators in major jurisdictions. Finally, we will outline strategies and technological tools that can help operators detect and prevent these forms of fraud, and provide practical recommendations for sportsbook operators, compliance teams, and platform providers to strengthen their defenses.

Defining Geolocation Fraud and Proxy Betting

Geolocation Fraud: In regulated betting markets, operators are typically required by law to ensure that customers are located in a jurisdiction where betting is legal. Geolocation fraud occurs when a person uses technological tricks to falsify or hide their true location in order to place a wager they otherwise couldn’t. This is most commonly an issue in online and mobile betting. For example, an individual living in a state or country where online sports betting is not permitted might use a virtual private network (VPN) or other tools to make it appear as if they are accessing the sportsbook from an approved location. Other techniques include GPS spoofing (using software to feed false GPS coordinates to a device), using proxy servers or remote desktop connections, or tampering with device settings to misreport location data. The goal of geolocation fraud is to defeat the sophisticated location checks that sportsbooks and their technology partners have put in place. By doing so, bettors attempt to gain unauthorized access to betting markets or opportunities, violating regulations that govern where betting can take place.

Proxy Betting: Proxy betting, also known as messenger betting or surrogate betting, is the practice of placing bets through a third party. In a proxy betting scenario, the person who wants to make the wager (the principal) is not the one directly placing the bet; instead, they rely on an intermediary (the proxy) who is in a permissible location or situation to execute the wager on their behalf. Proxy betting can take various forms. In a land-based setting, it might be as simple as a customer calling a friend who is physically present in a sportsbook and asking them to put down a bet. In a digital context, proxy betting often entails sharing account credentials: one person gives another access to their online betting account so the latter can place bets for them. In either case, the outcome is that wagers are being placed by someone other than the account owner or the person whose identity is on record with the sportsbook.

It’s important to note that both geolocation fraud and proxy betting are generally prohibited in regulated markets. They subvert the regulatory requirement that betting must be conducted by authorized individuals within authorized jurisdictions. Sportsbook operators commonly include explicit prohibitions against these behaviors in their terms and conditions. For instance, a sportsbook’s rules will state that the account holder must be the one placing bets and that no bets will be accepted on behalf of someone else. Likewise, most online betting platforms warn that using tools to obscure one’s location (such as VPNs) is against their policies. These rules aren’t mere formalities – they exist because geolocation fraud and proxy betting can lead to legal violations for both the user and the operator, and undermine the trust that regulators and the public place in the licensed betting system.

Why These Practices Undermine Compliance and Integrity

Regulated sports betting operates under strict conditions set by laws and governing bodies to ensure fairness, prevent crime, and protect consumers. Geolocation fraud and proxy betting strike at the core of these objectives in several ways:

• Regulatory Compliance: Jurisdictions legalize sports betting on the condition that it will only be offered to eligible participants and within specific geographical boundaries. For example, in the United States, each state that legalizes online sports betting requires that bets are only accepted when the bettor is physically within that state. If someone uses a spoofed location or a proxy to place a bet from outside the allowed area, the operator is inadvertently violating state law (and potentially federal laws like the Wire Act in the U.S.). Even in countries with national licenses, operators must often ensure they do not take bets from countries or regions where they lack authorization. Every instance of geolocation evasion or third-party betting can be seen as a compliance failure, potentially exposing the operator to fines or sanctions even if done without the operator’s knowledge. Over time, if such breaches are not controlled, regulators may question the operator’s suitability to hold a license.

• Integrity of Sports Wagering: The integrity of sports betting refers not just to sports themselves being free from manipulation, but also to the integrity of the wagering process. If bettors from prohibited jurisdictions or unauthorized individuals can place wagers, it creates an uneven playing field and can facilitate other illicit behavior. For example, a person banned from betting (such as a sports official or an athlete) might use a proxy to bet on a game they’re involved in, circumventing detection and potentially enabling match-fixing or insider betting scandals. Indeed, there have been cases of professional athletes and insiders attempting to wager through friends or third parties, violating sports league rules and undermining confidence in the fairness of competition. Even beyond insider scenarios, if certain bettors can flout the rules, it undermines public trust in the system. Other bettors may feel the system is not secure or fair if some participants appear to have an undue advantage by operating from areas or in ways others cannot.

• Risk Management Frameworks: Sportsbooks employ risk controls to manage how much exposure they have on certain events and to detect suspicious betting patterns (which could indicate anything from problem gambling to match-fixing attempts). Geolocation fraud and proxy betting can distort these controls. For instance, a bookmaker might normally limit large wagers from unknown customers or scrutinize bets coming from jurisdictions with a history of fraud. But if those bets are coming through a VPN masquerading as a local address, they might slip through initial risk filters. Similarly, a group of colluding bettors (a betting syndicate) could use multiple proxies in different locations to place a barrage of bets that appears unrelated, defeating systems that are looking for a concentration of activity in one area or account. All of this complicates the operator’s ability to manage risk: it’s harder to enforce deposit limits, harder to spot self-excluded gamblers trying to sneak back in via another state or account, and harder to identify abnormal betting surges tied to a single source. Ultimately, these forms of fraud increase the chances of undetected fraud or even financial losses if the operator cannot accurately gauge who is betting and from where.

• Legal and Ethical Standards: Beyond the technical compliance, there’s a broader legal and ethical dimension. Regulated operators are expected to uphold the law in spirit, not just letter. Proxy betting often has associations with money laundering and other crimes – for example, in some cases criminal organizations might recruit individuals (or corrupt insiders) to place bets on their behalf as a way to launder illicit funds through betting winnings, or to evade currency controls. Meanwhile, geolocation spoofing might be used by problem gamblers who have been blocked in their own region (or by underage individuals) to get around safeguards. By cracking down on these practices, regulators and operators signal their commitment to responsible, legal betting. If they are lenient or ineffective against such fraud, it raises questions about their commitment to those standards.

In summary, geolocation fraud and proxy betting threaten to erode the very foundations of regulated wagering. Compliance violations can lead to severe penalties; integrity breaches can lead to scandals, loss of consumer confidence, and even intervention by law enforcement; and risk management failures can hurt a sportsbook’s bottom line and reputation. Next, we will explore how these issues manifest in both physical and online betting environments, with real-world examples illustrating the scope of the challenge.

Challenges in Land-Based vs. Digital Sportsbook Environments

Both traditional brick-and-mortar sportsbooks (including casinos and betting shops) and online/mobile platforms face these issues, though the methods and detection challenges can differ.

Land-Based Sportsbooks and Casinos

In a physical sportsbook or casino environment, proxy betting is the primary concern related to our topic. Geolocation fraud in the classic sense (i.e., using a fake location) is less of an issue when bets are placed in person; the customer is either physically there or not. However, in large resort casinos or stadium sportsbooks, there could still be location-related rules – for example, some jurisdictions allow mobile betting but only while the patron is on the premises of a casino or within a certain area. Enforcing those micro-geographical rules does involve geolocation technology even on-site (such as detecting if a mobile app user is inside a particular building). But the more prevalent threat for retail betting is proxy betting via human intermediaries.

Proxy betting in person can take a few forms. A common scenario is a high-stakes customer who cannot be physically present sending instructions to a casino employee or another person on the floor. This might be done over the phone or by text message. The person physically present then places the bet at a counter or kiosk using cash or a betting account, as if it were their own wager, but in reality it’s on behalf of the absent patron. This practice has been explicitly banned in many jurisdictions because it circumvents ID checks and other controls. A high-profile example occurred in Pennsylvania (USA) in 2024: a major casino was fined by regulators after an investigation found that sportsbook employees had been placing bets on behalf of a patron who was not on site. Over an eight-day period, employees took instructions via text message and placed 15 wagers totaling nearly $300,000 for a customer who never showed up in person. Not only did this violate the state’s Gaming Act (which requires that the person placing the bet must be the actual bettor), but it also violated the casino’s internal policies. The fallout was severe: the casino paid a large fine, the employees involved were terminated and even had their gaming licenses revoked, and the patron was identified and placed on an exclusion list (banned from all state casinos). This case illustrates how seriously regulators treat proxy betting in a land-based context. It also shows how such schemes can slip through if internal controls and employee training are not sufficiently robust – in this incident, it was eventually a conscientious employee’s tip that alerted compliance officers to the violation.

Another context where proxy betting has thrived historically is in Asian casino VIP rooms. For instance, in Macau (one of the world’s largest regulated gambling hubs), so-called “telephone betting” became popular among wealthy bettors from mainland China. These individuals often face travel restrictions or simply prefer not to appear personally. In the early 2010s, Macau casinos would accommodate such VIP clients by allowing a proxy (often a junket representative or agent) to sit at a private table, communicate via phone with the real bettor, and place bets on games like baccarat according to the bettor’s instructions. The use of proxies in Macau grew because it enabled high-rollers to participate from afar, but it raised numerous regulatory red flags: it blurred the line between legal in-person betting and illegal online gambling, it could facilitate money laundering by obscuring the source of funds, and it ran afoul of mainland Chinese laws (which prohibit gambling). Macau authorities eventually cracked down – by 2016, proxy betting by phone was explicitly banned in Macau’s casinos as part of a broader anti-corruption and anti-illegal gambling campaign. That enforcement led to a shift of this activity to other jurisdictions in the Asia-Pacific region (for example, casinos in the Philippines and Cambodia saw an uptick in accepting bets via phone or internet streaming for remote VIPs once Macau ceased doing so). The Macau proxy betting saga underscores a crucial point: even in a tightly regulated market, if there is a demand for remote betting and a willingness among intermediaries to facilitate it, proxy betting will emerge unless actively policed. It becomes an ongoing cat-and-mouse game between regulators enforcing the rules and those seeking to circumvent them for high stakes.

Land-based proxy betting is not limited to VIPs. It can occur at a smaller scale too – for example, an underage person might stand outside a betting shop and give cash to an of-age friend to place a bet for them (violating age restrictions), or someone excluded for problem gambling might recruit a proxy to lay bets on their behalf. These scenarios are harder to systematically detect because they involve human arrangements outside of any system. Sportsbooks rely on training staff to notice suspicious patterns (like one person frequently coming in and making bets for another who is hovering nearby, or employees being approached with unusual requests). They also rely on clear rules and deterrents (in many places, both the proxy and the person initiating such bets can be banned or even face criminal penalties). The challenge in the retail environment is largely human-factor based: identifying and preventing illicit arrangements in real time on the casino floor or at the betting window.

Online and Mobile Sportsbooks

In the online arena, geolocation fraud is the predominant challenge, often intertwined with proxy betting via account sharing. Modern regulated online sportsbooks use sophisticated geolocation technologies to pinpoint where a user is accessing from. This is not a simple IP address check; it involves multiple layers of verification. For example, a sportsbook app on a mobile phone may use the device’s GPS data, nearby Wi-Fi network information, and cell tower triangulation to confirm the user’s location. The app or website might also use browser location APIs and even examine device settings or other metadata. Providers like GeoComply and others specialize in this service, performing dozens of checks – such as looking for VPN usage or mismatches between a device’s stated location and its network origin – to ensure a bettor is truly where they claim to be. Regulators in the U.S. and elsewhere mandate high standards of accuracy for these geolocation checks. Online betting simply cannot operate legally without these safeguards: if the system detects you are outside the permitted state or country, it will block the wager.

Despite these measures, determined fraudsters attempt to find cracks in the system. VPNs are a commonly tried method. A VPN can mask the user’s IP address by routing it through a server in another location. On the surface, it might look as though the user is in, say, London when they are actually in a country where the site isn’t legal. However, top-tier geolocation systems can usually detect common VPN usage. They maintain databases of known VPN server IP ranges and can flag if a connection appears to come from a data center or an anomalous source rather than a typical residential or mobile network. Furthermore, more advanced fraud attempts might use residential proxies (which hijack or use real residential internet connections elsewhere to appear legitimate) or remote desktop software. In one notable modus operandi, bettors have tried to circumvent U.S. state restrictions by setting up a computer or virtual machine inside a legal state and then remotely controlling that machine from their location in a prohibited state. If done carefully, the bet request technically originates from a device in the allowed jurisdiction. However, such schemes are difficult to pull off without leaving traces – for instance, the remote control software itself might be detected by the anti-fraud systems, or the pattern of login (with one account being accessed locally and then remotely) could trigger suspicion.

Online proxy betting via account sharing is another angle: this is where geolocation and proxy issues intersect. For instance, consider a scenario where a bettor in a country where betting is illegal has a friend in a legal jurisdiction open an account in the friend’s name. The friend then either gives the login to the bettor or simply follows the bettor’s instructions to place wagers. To the sportsbook, it initially appears as a normal account belonging to the friend. But behind the scenes, it’s proxy betting for an outsider. Sportsbooks combat this with strict Know Your Customer (KYC) protocols and device recognition. If an account suddenly starts being accessed from a different city or country than it was registered in, especially if that pattern correlates with big bets, it raises red flags. Indeed, several high-profile cases in the United States have revolved around exactly this scenario. A famous case in New Jersey involved a high-rolling customer who resided in Florida (where online betting was not legal) using his mobile betting account while he was physically out-of-state. How? He allegedly had an associate in New Jersey hit the buttons for him. The account was flagged when an extraordinarily large wager (a multi-million-dollar parlay bet) went through from an IP in New Jersey while everyone suspected the real customer was in Florida. The operator suspended the account and regulators launched an investigation, suspecting a breach of both state rules and possibly the federal law that prohibits transmitting wagers across state lines.

Another example: a major U.S. sportsbook discovered that one of their VIP clients was effectively remote-controlling bets during a championship game, and rather than immediately shutting it down, an internal employee misguidedly attempted to create a workaround (like imposing a delay on the bets to mimic compliance). This eventually came to light and resulted in regulatory action. In that instance, the sportsbook faced a substantial fine for “knowingly allowing proxy betting.” The case sent shockwaves through the industry: it demonstrated that regulators will hold operators accountable not only for inadvertent failures in geolocation but especially for willful neglect or cover-ups of proxy betting by top customers. It also highlighted that employees at sportsbooks must be trained to enforce the rules evenly – even if a proxy bettor is a big-spending “whale” who brings in a lot of business, the long-term consequences of permitting their fraud can be far worse than losing one high-roller.

European online sportsbooks likewise face geolocation-related fraud, albeit with different nuances. In Europe, many operators hold licenses in multiple countries or in international jurisdictions like Malta or Gibraltar that allow them to serve various markets. These licenses usually come with the stipulation that the operator must geo-block or refuse service to customers in countries where they lack a license or where gambling is illegal. For example, a UK-licensed bookmaker should not accept bets from someone in a country that prohibits online betting, and conversely if a site has a license only for say, Italy, it should ensure non-Italians (or at least non-residents) aren’t betting from abroad without permission. If a European bettor uses a VPN to circumvent these restrictions – say a person in a country with strict gambling laws accesses a UK site pretending to be in the UK – it’s a violation of the site’s licensing conditions. There have been cases where regulators discovered operators taking many bets from outside their authorized jurisdiction (sometimes identifiable through telltale signs like foreign IP addresses or unusual payment methods). Those operators faced heavy fines or even had their licenses reviewed. While European regulators may not chase after every individual VPN user, they do expect the operators to have systems to detect and prevent obvious cases, and to conduct KYC that includes knowing the customer’s residency and usual location. Failing to do so not only breaks gambling laws but also raises anti-money laundering concerns, since cross-border betting could be a channel for moving money illicitly.

In Australia, a country with a nationwide regulated sports betting market, geolocation compliance is more straightforward in that any adult Australian can legally bet online with a licensed operator, regardless of which state in Australia they are in (with some exceptions for in-play betting, which must be done by phone or in person due to local law). However, Australian regulators still require operators to block access from outside Australia and to ensure that the person betting is indeed who they say they are. Australian operators have been wary of proxy betting in contexts like in-play wagering (where a bettor technically isn’t allowed to place a live bet online but might try to use a workaround like calling a friend at a betting shop or using automation that mimics a phone call). Additionally, Australian sportsbooks have encountered syndicate betting rings that exploit account holders: there have been media reports of betting syndicates paying locals to open accounts which the syndicate then uses – not necessarily to break geolocation laws, but to get around betting limits and identity-based restrictions. This is analogous to proxy betting, since the person pushing the buttons on the account is not the true beneficiary. It’s a reminder that even when location isn’t the main issue (because the bets are placed within the allowed geography), the principle of “one account, one person, in good faith” has to be protected for compliance and integrity reasons.

Across both land-based and online settings, these examples demonstrate that geolocation fraud and proxy betting are not theoretical problems; they are real, and regulators across multiple continents have taken notice. From North America’s state-by-state digital betting regimes, to Europe’s patchwork of national regulations, to Asia-Pacific’s casino hubs and betting markets, the challenge is universal. In the next sections, we dive deeper into the repercussions for operators and how exactly these frauds are perpetrated.

Operational, Financial, and Legal Implications for Sportsbooks

Geolocation fraud and proxy betting can hit sportsbooks on several fronts. Understanding these implications helps explain why compliance departments and regulators are so vigilant about these issues.

Operational Implications

From an operational standpoint, dealing with these fraud risks requires robust systems and trained personnel, which can be resource-intensive. Sports betting operators must integrate geolocation verification services into their platforms, maintain up-to-date fraud detection tools, and respond to alerts about suspicious activity. When geolocation checks fail (either falsely blocking a legitimate bettor or allowing a fraudulent one), it creates friction and requires manual review. For example, if a legitimate customer is incorrectly flagged as out-of-state due to a technical glitch, they might flood customer support with complaints – during which time betting activity is lost and the brand’s reputation suffers. On the flip side, if a fraudulent user succeeds in placing bets, the operator might have to later unwind those bets, freeze payouts, and conduct investigations, all of which distract from normal operations.

There is also the need for constant staff training and internal controls. Front-line employees (whether in a casino or those monitoring online bets) need to know the signs of proxy betting or location misuse. In a retail sportsbook, this could mean enforcing rules like “no cell phone usage at the counter” (instituted because of cases where staff were taking phone instructions from proxies) and having surveillance watch for patterns of the same person placing bets for multiple others. Internally, departments have to coordinate – compliance officers, IT security, payments/fraud teams, and customer service all must work together to flag accounts that might be violating policies. For instance, the fraud team might notice an account accessed from two different provinces within an hour (impossible travel time), while the customer service team might have heard a customer slip up and mention “my friend placed the bet for me.” It’s an operational challenge to connect these dots, especially at scale with thousands or millions of users.

If an incident does occur, like the examples noted (where proxies were discovered), the operator often has to undertake an internal investigation and report findings to regulators. This process can disrupt normal business, involve forensic analysis of data logs, and sometimes lead to the suspension of certain betting activities until issues are resolved. In extreme cases, regulators might even pause an operator’s ability to sign up new customers or offer certain products if systemic compliance failures are suspected – an operational nightmare for any business.

Another operational consideration is technology overhead. As fraudsters get more creative, sportsbooks have to frequently update or change their detection methods. This might mean upgrading geolocation SDKs in their mobile apps, adding new data sources (like device fingerprint databases or IP reputation services), and performing regular audits of their own systems. Operators often find themselves in an arms race with fraud tactics: for example, once multi-factor authentication is implemented to stop simple password sharing, fraudsters might pivot to social engineering or device cloning. Continuous improvement and adaptation are necessary, which requires allocating budgets and engineering time – an operational cost that is sometimes hard to quantify but very real.

Financial Implications

The financial risks tied to geolocation fraud and proxy betting are significant. The most direct impact is the threat of regulatory fines and penalties. Modern gambling regulators have not shied away from levying substantial fines on operators for various compliance failures, and allowing unauthorized bets can be one such failure. As seen, a U.S. sportsbook was fined six figures for a proxy betting breach in New Jersey. In Europe, fines can be even larger; regulatory bodies like the UK Gambling Commission or authorities in the Netherlands and Scandinavia have issued multi-million-dollar penalties to operators for taking bets from excluded markets or failing to implement adequate controls (often these fines encompass multiple issues including anti-money laundering and social responsibility, but weak location controls can be one component). Besides monetary fines, regulators can impose costly remedial measures – for instance, requiring the operator to hire independent auditors, invest in new technology, or halt certain operations until compliance is verified.

Beyond regulatory fines, revenue loss is another factor. If a sportsbook must void bets or restrict activity due to a fraud incident, it loses legitimate business. Consider a scenario where a betting site discovers that a group of accounts were all run by a proxy syndicate; the site might choose to void all those bets (to maintain integrity). Not only could that lead to forfeiting any profit margin on those bets, but it could also result in paying back stakes, handling chargebacks, or even facing civil claims if not handled properly. Moreover, if a regulator orders a temporary suspension of service (even a limited one), competitors can seize the opportunity to attract disaffected customers. In a competitive industry, any hit to continuity can translate to a loss of market share.

There’s also the indirect financial harm of fraud. For example, proxy betting can facilitate bonus abuse – a syndicate might use proxies to create multiple accounts and claim sign-up bonuses or free bets that are intended for genuine new customers. This erodes the marketing spend of the company. Similarly, if location spoofing allows arbitrage bettors or sharp syndicates from jurisdictions with sophisticated bettors to masquerade as local casual bettors, the sportsbook’s odds-making could suffer unexpected losses. Many sportsbooks tune their risk models to the audience; if that calibration is thrown off by hidden clusters of high-skilled bettors coming through via VPNs or proxies, the book could take bigger hits on certain lines than anticipated.

Legal liabilities can also emerge. If an operator is found to have systematically accepted illegal bets (even unknowingly), it could face lawsuits or legal claims. For instance, U.S. federal prosecutors might investigate whether Wire Act violations occurred if bets routinely crossed state lines through proxies or tech workarounds. There’s also the risk of reputational damage feeding into financial damage – a public scandal involving underage betting via a proxy, or a match-fixing scheme aided by geolocation failures, can scare investors, harm stock prices (for publicly traded betting companies), and invite costly investigations.

Consider also the cost of fraudulent payouts. If someone uses a fake location to bet and wins a huge jackpot, the operator is in a bind. Paying it out could mean they’ve facilitated an illegal transaction; not paying it could trigger disputes and bad press. In one sense, strong geolocation enforcement protects sportsbooks from having to be in that position. There have been instances where operators voided winnings once they discovered the bettor was not actually in the allowed area when betting – which can lead to customer outrage or legal battles, but paying those winnings could be even worse (as it might be paying out illicit funds or encouraging others to try their luck at breaking the rules).

Legal and Regulatory Implications

Legally, sportsbooks must adhere to both the letter and spirit of gambling laws in each jurisdiction they operate. Geolocation fraud and proxy betting cut directly against many of those laws. In the U.S., for example, accepting a sports wager from outside the state authorized to take that wager can violate federal law (like the Interstate Wire Act of 1961) and state-level laws. Regulators like state gaming commissions or boards treat such breaches as serious violations of license terms. This can lead to formal enforcement actions: fines, probationary license periods, or even license suspension and revocation in egregious or repeated cases. The legal expectation is not just passive either. Regulators expect operators to be proactive – to have “zero tolerance” policies and effective monitoring. In some jurisdictions, rules are explicitly spelled out in the regulations or technical standards. New Jersey, for instance, put into its sports betting regulations that no licensee shall knowingly allow a person to wager for another or to use another’s account. Other jurisdictions similarly mandate controls to prevent “messenger betting” (another term for proxy betting). If an operator is found to have been negligent in these duties – or worse, complicit – the legal consequences can escalate to criminal investigations.

For example, if an operator’s staff collude with bettors to circumvent laws (as in the case where a sportsbook manager allegedly agreed to allow proxy betting for a VIP), that can trigger not just regulatory discipline but also inquiries into whether there was any fraud or bribery involved internally. A regulator could refer cases to law enforcement if they suspect organized crime or willful flouting of gambling laws. Asia’s experience provides a stark view: the huge proxy betting operations linked to junket networks in Macau and elsewhere became entwined with money laundering, leading to high-profile arrests and trials (in one notable case, a junket executive was prosecuted for billions of dollars in illegal betting transactions that involved proxies and online platforms funneling bets from Mainland China – charges that carried potential decades of imprisonment under anti-organized crime statutes).

Another legal dimension is the responsibility to report. Casinos and sportsbooks often have to file Suspicious Activity Reports (SARs) or equivalent when they detect something that could be linked to illegal wagering or money laundering. If a sportsbook detects that someone is repeatedly logging in from two far-flung locations or that multiple accounts are controlled by one entity (a sign of a proxy ring), they may need to report that to financial regulators or other authorities. Failing to do so could be a violation of anti-money laundering (AML) laws. The involvement of agencies like the U.S. Treasury’s Financial Crimes Enforcement Network (FinCEN) shows that this isn’t just a gaming issue, but part of broader financial compliance. FinCEN has made it clear that online betting activity should be monitored for irregularities just like physical casinos monitor for structuring or suspicious transactions. So a sportsbook has a legal duty to keep records and flags of user location data and account usage that might suggest unlawful behavior.

Finally, consider contractual and civil implications. If a bettor deceives the operator and violates terms of service by spoofing their location, the operator usually has the right to close the account and void bets. Those terms are part of the contract between bettor and operator. However, in practice, enforcing those terms can lead to disputes. A customer caught doing proxy betting might claim they didn’t know it was wrong, or might try to sue to recover their account balance or winnings. Generally, courts side with the licensed operator in upholding clear terms meant to ensure legal compliance, but these processes can still drain legal resources. On the flip side, if an operator were egregiously lax and this led to some harm (for instance, a self-excluded gambler manages to place bets via proxy and incurs huge losses), we could see lawsuits alleging the operator failed in their duty of care or compliance obligations.

In summary, the legal context surrounding geolocation and proxy issues reinforces why sportsbooks must be very cautious: licenses and laws are on the line. For every major jurisdiction – whether it’s a U.S. state, the UK, an EU country, or an Asia-Pac casino regulator – maintaining rigorous anti-fraud measures for location and identity is non-negotiable.

How Fraudsters Exploit Location and Identity – Common Schemes

Understanding the tactics used by fraudsters and illicit bettors is crucial for crafting defenses. Let’s delve into the common methods by which bad actors attempt geolocation fraud and proxy betting.

• VPNs and Proxy Servers: As mentioned, using a VPN (Virtual Private Network) is one of the simplest and most widely attempted methods to trick online sportsbooks about a user’s location. A VPN service routes the user’s internet connection through a server in a location of their choosing. So a bettor in a country where betting is banned might connect via a VPN server in, say, New Jersey to access a NJ betting site. Similarly, a bettor in a U.S. state that hasn’t legalized sports betting might use a VPN to appear located in a neighboring state that has. Basic proxy servers (which aren’t full VPNs but can mask IP addresses) serve a similar purpose. Some tech-savvy users even employ Tor networks or other anonymity tools to hide their true IP. However, because VPNs are so commonly known, many sportsbooks outright block connections from known VPN IP ranges. Thus, serious fraudsters have evolved to use more covert proxies. These include residential proxy networks, which are services that route traffic through real residential internet connections around the world (often unbeknownst to those residents, via malware or paid programs). A connection coming from a residential IP is harder to detect as fraudulent because it looks like an ordinary home user’s address. Likewise, mobile device emulators can be used in tandem, making it appear as if a genuine phone at that location is accessing the service, when in fact it’s a program.

• GPS Spoofing Apps: For mobile bettors, especially on Android devices, there are apps that a user can install to fake their GPS coordinates. These “location spoofer” apps are sometimes used by video game or social media enthusiasts to pretend they are somewhere else, but they can equally be used to fool a betting app. If a bettor’s phone GPS is sending out a false location, and if the sportsbook’s checks are not robust beyond GPS, this could allow someone outside the zone to appear inside it. However, modern betting apps often cross-verify multiple signals, so just spoofing GPS alone might not be sufficient if other indicators (like the Wi-Fi network or IP address) tell a different story. Some bettors go to great lengths, like spoofing GPS and using a VPN simultaneously, hoping the combination evades all detection.

• Account Sharing and Mule Accounts: Account sharing can range from a casual favor between friends to an organized service. On the simpler end, a bettor might give their username and password to a friend or relative who is traveling or living in a legal area, allowing that friend to place bets for them. We saw this in the case of the hockey player who was physically in one country but had friends in another place bets on his behalf using accounts in that other region. On a larger scale, there are actually “mule” services where individuals in certain jurisdictions are recruited (sometimes paid) to open accounts under their own names, only to hand over control of those accounts to the true bettors. This happens often to exploit sign-up bonuses or betting limits – a single bettor or a betting syndicate might effectively control dozens of accounts through other people. Those people might be willing accomplices (paid a fee or lured by a cut of winnings) or sometimes victims of identity misuse. In either case, it’s proxy betting through identity fronting. In the digital context, these mule accounts might all be accessed from a central location via remote connections or by using each mule’s credentials through various devices. Detecting this often relies on noticing that multiple accounts exhibit coordinated behavior (like placing the same bet selections at nearly the same time, or funds moving in similar ways).

• Syndicates and Collusion: A betting syndicate is a group that pools resources and intelligence to bet in a coordinated way, often to maximize returns or exploit weaknesses in betting markets. Syndicates cross into “fraud” when they violate rules to do so – for instance, a syndicate might employ people in multiple states or countries to all place the same bet where odds are most favorable, even if some of those people are technically not allowed to bet in those markets. By distributing their activity, syndicates try to fly under the radar. In terms of geolocation, a syndicate could use members (or hired bettors) in each target jurisdiction, or use technical means to simulate that. Some have been known to use remote desktop tools: the leader of the syndicate might have a dashboard showing betting lines, and as opportunities arise, they quickly deploy bets via remote-controlled machines in the necessary state or country. This method essentially uses technology to accomplish proxy betting at scale. We can think of it as a ghost operation: dozens of computers or phone devices sitting in various allowed regions (sometimes literally hosted in those places), each logged into a betting account, and one mastermind triggering bets on all of them remotely when needed. Unusual synchronized patterns or the fact that those devices might all share some digital fingerprint (like they all run the same software version or connect to the same central server) can give them away.

• Circumventing In-Person Requirements: Some jurisdictions require in-person account registration or in-person bet placement for certain wagers (for example, Nevada historically required bettors to sign up for mobile betting accounts in person at a casino). Fraudsters have tried to get around this by sending proxies to register on their behalf (with fake IDs or under pretense) or by exploiting any loopholes such as using a mobile app’s geo-perimeter. A creative attempt was observed in Australia when live betting online was banned: a couple of operators introduced a feature where the bettor would click a button on the app to ostensibly initiate a phone call to the betting desk (thus complying with the letter of the law that live bets must be via phone). This wasn’t illegal per se, but it shows how the industry sometimes toes the line on geolocation or communication restrictions, which can blur into questionable territory. Regulators closed that loophole, seeing it as effectively an automated proxy for a phone bet.

• Tools for Anonymity and Evasion: Beyond VPNs and spoofers, fraudsters also use tools like rooted or jailbroken devices (which can run apps in ways that bypass normal security), emulation (running betting apps on a PC in an emulator to manipulate data), and even hardware tricks. An interesting case occurred in the early days of mobile betting where bettors on a state border would literally try to connect to cell towers just inside the legal state by using signal-boosting antennas, while they sat physically on the other side of the border. While not exactly “fraud” (they were physically very close), it shows the extremes people will go to for an edge. In a more malicious sense, custom scripts and bots can be used to automate multiple accounts. If one person can only physically log into one account at a time, a botnet of automated scripts can log into dozens of accounts concurrently and place bets in milliseconds. These might try to exploit late line changes or bonuses and are often orchestrated from a single location (making them geolocation fraud if that location is not supposed to have access).

• Exploiting Insider Access: Although rarer, some instances involve insiders or employees aiding the scheme. For example, a sportsbook employee might override location checks or manually accept a wager they shouldn’t. This is what happened in the casino case with employees placing phone bets for a patron – staff actively colluded. Insiders might be tempted by bribes or the desire to keep a big customer happy. In the digital world, an employee might share internal systems or provide a rogue API key to someone, allowing bets to be injected as if from a safe source. These are serious breaches that often come to light eventually and result in heavy penalties or criminal charges.

To summarize, fraudsters are quite inventive. They leverage a combination of technology (VPNs, spoofing, remote access) and human networks (proxies, mules, collusion) to break the walls that regulators and operators put up. It’s a continual evolution; when one method gets too risky (like basic VPN use), they search for the next (like residential proxies or device emulators). This is why sportsbooks and regulators emphasize a multi-layered defense – there is no single silver bullet to stop all these methods, but a combination of smart technology and vigilant processes can make it extremely difficult for fraudsters to succeed without detection.

Regulatory Expectations in Key Jurisdictions

Different jurisdictions have developed their regulatory frameworks to combat these issues, and while the core principle is the same (only allow legal, verifiable betting activity), the specifics can vary. Here’s an overview of how some major regulated markets approach geolocation and proxy betting challenges:

• United States: Since the U.S. has a state-by-state legalization model for sports betting, regulators in each state set geolocation as a fundamental requirement. From the moment legal online sports betting began post-2018, states required that any mobile betting app include certified geolocation compliance tools. Regulators such as the New Jersey Division of Gaming Enforcement, Nevada Gaming Control Board, Pennsylvania Gaming Control Board, and others all require licensed operators to demonstrate that their systems can accurately and reliably geofence their operations. Regular audits are conducted to verify geolocation efficacy. U.S. regulators also explicitly ban proxy betting. Many states have codified this in regulations or statutes – for example, New Jersey’s rules (and similarly others) clearly state that no person shall place a bet on behalf of another and that operators must not facilitate or allow it. The expectation is that operators not only have passive checks (like automated blocks) but also active monitoring and enforcement. When breaches are discovered, as we’ve seen, enforcement has followed in the form of fines and mandates for corrective action. U.S. authorities also coordinate with federal bodies: for example, state regulators often liaise with FinCEN for potential AML issues and the FBI or DOJ for cases that might violate federal laws. The high profile of sports betting in the U.S. (with big-name companies and a lot of media attention) means regulators are under pressure to show the public that the system is safe from illegal influence. Thus, there’s a high standard for using advanced technologies (like multi-factor geolocation verification, device identification, etc.). It’s no coincidence that U.S. operators rely on companies like GeoComply that claim to “detect and block every spoofing scenario under the sun” – that’s essentially what the regulators demand.

• United Kingdom: The UK has one of the world’s most mature regulated betting markets, overseen by the Gambling Commission (UKGC). The focus in the UK is slightly different in that the entire country is one jurisdiction for betting (so domestic geolocation – e.g., ensuring someone is actually in the UK – is not usually an issue for UK-licensed sites except in verifying that a customer is in Great Britain as opposed to a banned territory like Northern Ireland for some products or simply confirming residence). However, the UKGC expects its licensees to block access from territories where the operator has no legal right to offer gambling. UK sites typically have long lists of “restricted countries” in their terms; accepting bets from those places can lead to compliance trouble. The Commission doesn’t provide a specific list of where each operator can or can’t operate – it puts the onus on the operator to ensure they are not illegally transacting with customers in jurisdictions that prohibit it. The UK is also very strict on identity verification and anti-fraud measures. Under their licensing, operators must complete age and identity verification before allowing a customer to gamble. This indirectly helps prevent proxy betting, because it’s harder to create dummy accounts or impersonate someone else when robust identity checks (including checking government IDs, verifying addresses, etc.) are in place at registration. The UK also enforces rules against allowing someone to gamble on behalf of a third-party if, for instance, that third-party is self-excluded or underage. While there might not be daily headlines about proxy betting in the UK as in some U.S. cases, the expectation is embedded in the overall compliance culture: any sign that an account is being misused or that multiple individuals are using one account would fall under social responsibility (protecting problem gamblers) and possibly anti-money laundering scrutiny. UK operators have been fined in the past for not adequately knowing who is behind the money in an account – one famous case involved VIP customers whose source of funds weren’t checked properly; had those VIPs been proxy bettors for someone else, that would have compounded the violation. In summary, the UK’s stance is that operators must know their customer and their customer’s location sufficiently to ensure all play is legal and above board.

• Continental Europe: Many countries in Europe now have their own licensing regimes (such as Italy, Spain, France, Sweden, the Netherlands, etc.). A common thread is the requirement for technical measures to restrict access only to residents or those physically in the country (depending on the nation’s rules). For example, French-licensed betting sites must not accept bets from outside France; they use IP blocking and address checks to enforce this. The Dutch regulator (KSA) went as far as to penalize operators prior to legalization for targeting Dutch consumers (even if those consumers accessed via a VPN or by navigating a site that had a .com URL with Dutch language options). Now that the Netherlands has legal online betting, its regulations demand strict geolocation to ensure only people located in the Netherlands (and not, say, in territories where it’s not allowed) can play, with Dutch ID verification in place. Germany recently implemented an interstate treaty for gambling which includes mechanisms to ensure players are within Germany and abide by cross-provider limits – this relies in part on geolocation plus a national database that tracks active players. In all these cases, the regulators often require periodic reports on any blocked attempts from outside jurisdictions and immediate reporting of any serious incidents of unauthorized access.

• Australia and New Zealand: In Australia, the regulatory framework is somewhat hybrid. Online sports betting is legal at a federal level but operators must be licensed by an Australian state or territory (the majority choose the Northern Territory due to its favorable regulatory environment). These licenses come with conditions: one common condition is to not accept bets from countries where online betting is illegal, and to only accept customers who are in jurisdictions where it’s legal (which practically means mostly Australian residents). Australian operators use geo-IP checks to block obvious foreign access and they also have to ensure compliance with the Interactive Gambling Act (IGA), which prohibits certain forms of online gambling (like casino games and in-play sports bets online). To adhere to the IGA, Australian sportsbooks have designed their products so that live bets require a phone call, and they monitor accounts for any suspicious circumvention of that rule. The regulators (like AUSTRAC for AML and state racing and gaming commissions for gambling conduct) expect proactive measures. If an Australian operator were found to be, for instance, knowingly letting overseas customers bet via proxies, they would face likely punitive action and possibly federal penalties under the IGA. New Zealand has a more monopolistic approach (the TAB is the primary operator), but they similarly employ geolocation to ensure only NZ residents use their online betting service, especially as they try to steer locals away from offshore websites.

• Asia-Pacific Jurisdictions: Asia is diverse in gambling law. Some places like Singapore and Hong Kong have very tightly controlled betting markets (state-run or limited operators), and they explicitly criminalize unauthorized online betting and proxy betting. Singapore, for example, not only blocks offshore betting sites but has prosecuted individuals for placing bets online through illegal sites. If those individuals tried to use VPNs or other means, it’s also an offense under their Remote Gambling Act. Proxy betting rings in physical sportsbooks or casinos are also targeted by law enforcement. In Hong Kong, authorities have to guard against illegal bookmakers who might use networks of agents to take bets from locals and place them in overseas markets – which is effectively large-scale proxy betting. The Hong Kong Jockey Club, which runs legal betting, works closely with police to disrupt such syndicates. Meanwhile, in jurisdictions like Macau and the Philippines where gambling is legal in casinos, regulators impose rules on casino operators to prevent proxy betting without permission. The Philippines, for instance, at one point allowed some form of remote betting for overseas customers (via licensed “remote gaming” operations), but they clamped down on illegitimate ones and introduced more stringent oversight after seeing how Macau’s ban pushed business to them. In short, across Asia-Pacific, the trend in regulated markets is toward minimizing any gray areas: if you are licensed to offer betting, you’d better ensure you’re not indirectly catering to someone you shouldn’t. Failure can mean anything from license cancellation to broader legal trouble given the strong link between illegal gambling and organized crime often cited by authorities there.

In all jurisdictions, transparency and reporting are part of the expectation. Regulators expect operators to self-report serious breaches. For example, the Pennsylvania case we discussed was mitigated by the fact the casino self-reported to the regulator and showed the steps it took to fix the problem. Regulators appreciate when operators do not hide issues; coming clean and demonstrating a corrective plan can sometimes reduce the severity of the enforcement action. Conversely, if an operator is caught hiding a proxy betting scandal or a series of geolocation failures, the trust between regulator and operator erodes, and the response will be much harsher.

The global regulatory momentum is clearly in favor of ever stronger safeguards. As more regions legalize sports betting (like parts of Latin America, Africa, etc.), they are often writing into their laws the lessons learned elsewhere – chiefly, that you must control who is betting and from where with high precision. This sets a baseline expectation that any serious sportsbook operator must meet through technology and governance.

Mitigation Strategies and Technology Solutions

Confronted with these multifaceted challenges, sportsbooks and their technology partners have developed a range of strategies and tools to combat geolocation fraud and proxy betting. Effective mitigation doesn’t rely on one single solution but rather layers multiple defenses. Here we outline some of the key approaches:

Advanced Geolocation and IP Intelligence

Multi-Source Location Verification: At the core of preventing location-based fraud is a strong geolocation solution. This means not depending solely on IP address for location, but combining numerous data points. Modern geolocation providers use a blend of GPS data, Wi-Fi network mapping, cell tower triangulation, and device-based location services to pinpoint where a user is. These systems can often locate a user within a very small radius. For instance, technology exists now to enforce not just state borders but even venue-specific boundaries (such as allowing mobile betting only inside a particular casino property by verifying the device is within geo-fenced coordinates). By cross-referencing multiple location signals, it’s much harder for a fraudster to fake all of them. They might spoof GPS, but the Wi-Fi networks their device “sees” won’t match the spoofed location. Or they might mask their IP, but the device’s own location sensor gives them away. Consistency checks are key – the system looks for alignment among data points; any inconsistency can trigger a block or a further review.

IP Reputation and Proxy Detection: Hand-in-hand with geolocation is IP intelligence. This involves using databases and detection algorithms to assess whether an incoming connection is from a known proxy, VPN, or otherwise suspicious source. Services track IP addresses associated with data centers, cloud providers, or anonymization networks and flag them. They also monitor for attributes like mismatched time zones or domain name records that suggest a proxy. Additionally, there are techniques to detect use of DNS manipulation or WebRTC data to see the device’s true local IP even if a VPN is in use. For example, a betting site might run a hidden check that asks the browser for its local network IP address (which a VPN user might not realize can be exposed), and if that local IP is a typical private range while the external IP is in another country, it’s evidence a VPN is on. The system can then block or challenge the user. IP intelligence solutions are becoming more sophisticated to tackle residential proxies too – some examine traffic patterns or do “ping” tests to detect anomalies in how data routes to the server.

Device Fingerprinting: Device fingerprinting is a technique to uniquely identify a device based on its characteristics – things like operating system version, browser type, screen resolution, installed fonts, hardware IDs, etc. While originally more for fraud prevention (to recognize if the same device is behind multiple accounts or if a known fraudulent device returns), it has geolocation implications. A fingerprinting system can tell if a device suddenly changes its apparent location or network in unnatural ways. Importantly, it can also detect signs of tampering. For instance, if a device is jailbroken or rooted (which is often necessary to run certain spoofing apps), that can be flagged. If an emulator is being used (which might present a strange combination of device attributes not found in real phones), that too can be caught. Some anti-fraud SDKs check for the presence of GPS spoofing apps or whether developer settings that allow mock locations are enabled. By having a profile of each device, an operator can also enforce one device per account rules or at least detect if one device is being used for many accounts (possible sign of a proxy or syndicate controlling multiple accounts). Conversely, if one account is accessed by dozens of devices over time, that could indicate credential sharing beyond a normal personal use.

Behavioral Analytics and Monitoring

Technological tools provide the raw data, but making sense of user behavior is equally vital. Behavioral analytics involves looking at patterns of activity that could indicate foul play:

• Login Patterns: A genuine user typically logs in from locations that make sense – perhaps their home city, maybe occasionally when traveling, but not jumping across the world and back in minutes. If an account logs in from New York at 2pm and then from Europe at 3pm the same day, that’s practically impossible travel and indicates account sharing or a VPN. Frequency and timing analysis can spot if multiple accounts always log in around the same time or if one account is active 24/7 (which a human alone couldn’t maintain, suggesting multiple people sharing it).

• Betting Patterns: Proxy bettors and syndicates often reveal themselves in how they bet. For example, a proxy might be less concerned with a normal pattern of play; they might only place very large wagers on specific events (e.g., our earlier example of a proxy being used just to place a few huge bets for an out-of-state VIP, otherwise the account is dormant). Or a cluster of accounts might all wager on the same unusual proposition within seconds of each other – implying coordination. Modern sportsbooks employ automated systems that crunch betting data to detect correlated betting and anomalies. These systems can raise real-time alerts if, say, ten accounts that shouldn’t be related (different names, different addresses) all bet on the same underdog within a minute – further investigation might reveal they all came from the same IP range or device type, etc.

• Financial Transactions: Another giveaway is how money moves. A common sign of multi-account or proxy rings is that multiple accounts might deposit funds in a similar manner (same payment method owner, or sequentially using the same credit card on several accounts – which should normally be prevented by payment controls, but proxies sometimes try to work around using different methods). On withdrawal, if one person was behind multiple accounts, you might see that they all withdraw to the same bank account or e-wallet. Good compliance practice is to only allow withdrawals to a payment method that was verified and in the account holder’s name, which helps stop one person funneling winnings from several accounts into one place. Still, behavioral analysis of transaction records can reveal suspicious connections, prompting further KYC on those users.

• User Interaction and Biometrics: Some advanced systems even examine how a user interacts as a behavior. For instance, behavioral biometrics can detect if the way an account is being operated suggests multiple users. If one session the account is navigated with lightning keyboard shortcuts (like a power user on a PC) and another session it’s slow and using mouse clicks (like a novice), it could be different individuals. Similarly, keystroke dynamics or touch screen behavior can potentially identify a person. While this is cutting-edge and not widely deployed in betting yet, it’s being explored. Simpler, more common measures include implementing two-factor authentication or requiring a one-time SMS code when an account is accessed from a new device or location – this at least ensures that the account owner is aware and authorizing the login, thereby deterring casual credential sharing. A proxy would have to coordinate with the account owner to get that code, adding friction or exposing their scheme.

• Rule-Based Flags and AI: Operators often set specific rules in their fraud management systems, like “flag any account that fails three location checks in one day,” or “block if user tries to log in with VPN twice.” They also increasingly use machine learning models that learn from known fraud cases to identify emerging threats. AI models can sometimes find complex patterns humans wouldn’t, like a group of accounts that seem unrelated but all show a similar subtle pattern (maybe they all hesitated 5 seconds before confirming a bet – perhaps because one person was sequentially controlling them). By training on historical data of proxy/fraud incidents, these models become better at predictive detection.

Identity Verification and Biometric Solutions

Since proxy betting often involves someone misusing another’s account or identity, strengthening identity verification is a powerful countermeasure:

• KYC at Onboarding: Requiring robust proof of identity and address when a user signs up can deter many would-be fraudsters. If someone is trying to create multiple accounts under different names, they’ll have to produce multiple sets of documents (or steal identities, which raises other flags). KYC processes now frequently use automated checks with government databases or credit bureaus to ensure an identity is real and not duplicated. Some jurisdictions require verification of the user’s location at signup by linking it to their address or issuing a postal code verification. All this creates a paper trail making proxy use riskier.

• Two-Factor Authentication (2FA): Enforcing 2FA on logins or sensitive actions means even if credentials are shared, the actual account holder’s device (phone for SMS or authenticator app) is needed to proceed. Some sportsbooks are moving toward mandatory 2FA, while others strongly encourage it. This doesn’t solve geolocation fraud per se, but it makes pure account sharing more cumbersome. If a bettor in a banned location has to keep asking the account owner for a 2FA code, that’s a pain point and might discourage ongoing proxy use. It also gives the legitimate account owner a chance to realize if their account is being accessed without their involvement (if they keep getting codes unexpectedly).

• Biometric ID Verification: A more advanced approach is to incorporate biometric checks. This can be done at account creation (for example, requiring a selfie and matching it to the ID provided, to ensure the person is real and the actual owner of the ID). Some operators have flirted with the idea of biometric verification at logins or for large withdrawals – for instance, a fingerprint or facial recognition via the mobile app. There’s understandable hesitance to make this a routine requirement for every login, as it may inconvenience players. However, for high-risk situations (like suspected proxy betting or high-value transactions), an operator might require the user to do a quick live face verification through the app. If the real account owner is not present (because someone else is using the account), they would fail that step. In New Jersey, regulators noted that while they aren’t mandating facial recognition for mobile betting accounts, they encourage operators to think about such technologies especially for VIP bettors as an additional security layer.

• Physical Verification for Suspect Accounts: In extreme cases, an operator or regulator might demand that a user verify their identity in person. For example, if there’s a dispute or a strong suspicion of proxy betting in a big case, the regulator could ask the operator to have the bettor come to a licensed facility to show ID and verify recent activity. This is rare and usually as a follow-up in an investigation rather than a preventive measure, but just the possibility of it can deter someone from engaging in a long-term proxy scheme – knowing that if caught, they’d have to show up and reveal that it wasn’t actually them betting all along.

Collaboration and Information Sharing

No sportsbook operates in isolation when it comes to fraud defense. Collaboration is increasingly seen as a necessity:

• Industry Forums and Blacklists: Operators often share information (through industry associations or through common vendors) about known fraud patterns, suspicious VPN IPs, or accounts that were caught and banned. For example, there are consortium databases for fraud in which if one operator flags a device fingerprint or identity for fraudulent behavior, others can know to watch out for it. A person banned for proxy betting at one major sportsbook might quickly find their accounts under scrutiny at another if information is shared that, say, their device or name is tainted.

• Regulator-Driven Databases: Some regions have regulator-run systems to help coordinate compliance. A prime example is the Multi-State Internet Gaming Agreement in the U.S. (for online poker liquidity sharing) which required strong mechanisms to ensure players are only where they are allowed. While that’s more for interstate games than sports bets, the concept extends: if states eventually share data, they might catch someone who tries to bet in multiple states under different names. Also, self-exclusion databases (like the U.S. national self-exclusion or the UK’s GamStop) indirectly serve to catch proxies – if a self-excluded person attempts to gamble via proxy and somehow uses their own details, they’ll be flagged.

• Law Enforcement Partnerships: Particularly for serious proxy betting connected to organized crime or large-scale illegal betting, sportsbooks often liaise with law enforcement. It’s not unusual for a bookmaker’s integrity or fraud team to pass information to police or sports integrity units if they uncover a pattern that suggests match-fixing or criminal involvement. This cooperation means that deterrence is not just losing an account, but potentially getting arrested. A betting syndicate that was using proxies across borders might be surveilled and caught via such joint efforts (as seen in some European football betting fraud cases where dozens of people were arrested in coordinated sweeps).

Technology Upgrades and Audits

Finally, continuous improvement is a strategy in itself. Operators are investing in:

• Regular Audits and Penetration Testing: Hiring ethical hackers or specialized firms to test their geolocation defenses. For example, a company may attempt to place bets from outside the jurisdiction using various methods to see if the geolocation provider catches them. These simulated attacks can reveal any weaknesses which can then be patched before real fraudsters exploit them.

• Tamper-Resistant App Design: Mobile apps can be designed to resist tampering and detect anomalies. Techniques like certificate pinning (to prevent man-in-the-middle attacks), obfuscation of code (to make it harder to alter the app to remove location checks), and jailbreak/root detection (to refuse running on compromised devices) all add layers of security. If a user tries to run the app on a rooted phone with fake GPS, the app might simply block usage until the device is secure.

• Real-Time Alerts and Case Management: Operators now employ sophisticated case management systems that bring together all the data – geolocation pings, account info, betting logs, etc. – to allow fraud analysts to quickly investigate when an alert triggers. If a potential proxy betting case is flagged, they can rapidly analyze linked accounts, freeze withdrawals preemptively, and escalate to compliance officers. Speed matters: catching something in real time is far better than days later after illicit bets have gone through and possibly payouts made.

• Customer Education and Deterrence: Some platforms explicitly remind users not to share accounts or use VPNs, both in onboarding and in periodic messages. They highlight that doing so can result in account closure and forfeiture of winnings. Clear signage (even literal signs in retail sportsbooks, as we saw implemented after the Pennsylvania case) and in-app warnings can deter some would-be rule breakers. If customers are aware that the system is monitoring for these violations, they may be less likely to attempt them. It’s a psychological defense as much as a technical one.

Through all these efforts, the aim is to make the cost of committing geolocation or proxy fraud far outweigh any perceived benefit. When location spoofing is immediately caught nine times out of ten, when multiple account schemes get shut down and funds seized, and when high-tech solutions make life difficult for even sophisticated cheaters, the vast majority of players will choose to play by the rules. The cat-and-mouse game may never fully end, but it can be contained such that incidents are rare and handled swiftly.

Practical Recommendations for Industry Stakeholders

Eliminating geolocation fraud and proxy betting requires a concerted effort from all parties in the sports betting ecosystem. Here are some practical steps and best practices tailored to different stakeholders:

For Sportsbook Operators (Management and Operations):

• Embed a Compliance-First Culture: Leadership should set the tone that regulatory compliance and integrity are top priorities, even above short-term profits. This means empowering compliance and fraud teams to take action (suspend accounts, refuse bets, investigate anomalies) without undue interference from executives or VIP managers who might be worried about offending a high roller. All levels of staff should understand that bending the rules on location or proxy betting is unacceptable.

• Invest in Proven Technology: Allocating budget for high-quality geolocation services and fraud detection tools is essential. Cutting corners here can be more costly in the long run. Choose vendors with a strong track record in the gaming industry and stay updated on their improvements. If a state or country updates its requirements (for example, requiring more frequent location checks or adding new exclusion zones like tribal lands), ensure your technology meets those standards promptly.

• Internal Protocols and Audits: Develop clear internal protocols for handling suspected fraud cases. This includes step-by-step procedures for what to do if geolocation verifies fail repeatedly for a user, or if an employee suspects proxy betting at a retail counter. Conduct regular internal audits of betting activity – e.g., a weekly review of any accounts that had irregular location changes or extremely large bets placed remotely. Simulate scenarios (table-top exercises) where the team has to respond to a proxy betting incident, so that if a real one occurs, everyone knows their role.

• Training and Awareness: Provide ongoing training to customer-facing employees and back-office analysts. Front-line staff in casinos or shops should be trained to politely but firmly handle situations like someone on the phone trying to place a bet, or a customer hinting that they’re placing a wager for someone else. Online customer support should know how to spot signs of someone possibly not being the true account holder (strange requests, inability to answer security questions, etc.). Regularly update staff about new fraud trends (for example, “We’ve learned fraudsters are attempting XYZ method; here’s what to watch for”).

• Enforce Terms Consistently: When a violation is confirmed, act decisively. That might mean closing accounts and confiscating winnings that were earned through fraudulent means (subject to legal approvals). It could also mean reporting individuals to regulators. Consistent enforcement helps deter future violations because word gets around that this operator takes rules seriously. If exceptions are made (e.g., a warning to a minor offender), ensure that’s part of a formal policy and that the rationale is documented; arbitrary leniency can send the wrong message or even raise fairness issues.

For Compliance and Risk Management Teams:

• Robust Monitoring and Analytics: Utilize dashboards and reporting tools to continuously monitor key indicators (failed login attempts due to geolocation blocks, multiple accounts on one IP, etc.). Set thresholds that trigger manual review – for instance, if any account logs in from two countries in one day, put it on a review list automatically. Use both rules and anomaly detection algorithms as discussed. Make sure the team is trained on the tools and that those tools are calibrated to avoid too many false positives (which can overwhelm and lead to missed real issues).

• Incident Response Plan: Have a clear plan for what to do when a geolocation or proxy betting incident is uncovered. This plan should cover immediate steps (freezing accounts, securing evidence like betting logs, notifying the regulator if required within a certain time frame) and follow-up (internal investigation, interviewing staff if any were involved, drafting a report). Time is often of the essence in such cases, particularly if collusion or match-fixing is suspected, so a practiced response is important.

• Collaboration with Peers: Sometimes, fraud rings target multiple operators. Compliance teams should network with their counterparts at other companies, either directly or via industry groups. Sharing intel about a new VPN trend or a particular syndicate’s modus operandi can help everyone bolster defenses. Of course, ensure such sharing complies with competition laws and data protection rules, but in general, cooperation on fraud does not raise issues and is encouraged by regulators.

• Regulatory Engagement: Maintain an open line of communication with regulators. Don’t wait only for mandatory reports; it can be beneficial to proactively discuss challenges and new developments with regulatory bodies. They may offer guidance or support. For example, if you notice a spike in attempts from a particular banned location, letting regulators know can alert them to a potential unlicensed operator or a need for broader enforcement. Being transparent can also build trust, so that if a violation happens, regulators know you’ve been acting in good faith to prevent and address issues.

• Continuous Education: The landscape is always changing. Encourage team members to attend relevant trainings, webinars, or certification courses on fraud prevention, cybersecurity, and regulatory compliance. The more knowledgeable the team is about both the betting industry and general fraud trends, the better they can anticipate and recognize problems. For instance, learning about how fraudsters operate in banking (phishing, ATO – account takeovers, etc.) can provide insights applicable to betting accounts as well.

For Platform and Technology Providers:

• Build with Compliance in Mind: Platform developers (whether in-house or third-party providers) should integrate compliance features into the core product, not as afterthought add-ons. That means when designing account systems, incorporate checks for one user per account, include geolocation calls at necessary points (not just at login, but maybe also at bet placement, withdrawal requests, etc., as required by local rules), and create clear audit logs. The software should make it easier, not harder, for operators to extract and review those logs.

• API and Integration Security: Many sportsbooks operate with a mix of vendor systems – a geolocation API from one, a trading platform from another, etc. Ensuring secure and seamless integration is key. For example, if the geolocation service returns a risk flag (like “possible VPN detected”), the platform’s bet engine should be able to consume that and enforce whatever rule is configured (block or hold bet for review). Avoid silos; all relevant data points on a transaction should feed into a central decision engine. Platform providers should also guard their APIs from being manipulated. Past incidents in other online services have shown that if an API isn’t secure, fraudsters might directly hit it to submit bets or queries outside of the normal app flow, potentially bypassing geolocation checks. Regular security testing of these interfaces is necessary.

• Innovation in User Verification: Technology providers can differentiate themselves by offering novel solutions to verify user presence and identity. For instance, some are developing location certificates – essentially cryptographic tokens that confirm a user’s device was verified at a certain location at a certain time, which can then be required for each bet. Others might integrate behavioral biometrics into their platform as an optional module, so operators can turn that on if desired. The idea is to keep pushing the envelope because fraudsters are doing the same. If you provide operators with options like facial recognition login or device integrity scoring out-of-the-box, they can choose the level of security appropriate for their risk tolerance and regulatory environment.

• User-Friendly Design: One challenge is balancing security with user experience. Tech providers should strive to implement protections in a way that doesn’t unduly frustrate legitimate users (or else operators might disable those features). For example, instead of outright blocking a user who might be on a VPN, perhaps the system can prompt them: “We’ve detected a possible proxy. Please disconnect and use a direct connection.” Sometimes the user might not even realize their VPN is on. Similarly, if a location check fails because GPS is off, prompt the user to turn it on rather than simply saying “you can’t bet.” Educating and guiding the user through minor issues can reduce support calls and keep honest users happy, while still stopping the dishonest ones.

• Scalability and Accuracy: Given the volume of transactions, the platform must handle geolocation checks and fraud analyses at scale without slowing down the betting experience. Providers should ensure their systems can handle peak loads (like major sports events) when geolocation queries may spike dramatically. The systems also need to be accurate — false positives (wrongly thinking someone is in a banned place) can anger customers and false negatives (missing a fraud attempt) can anger regulators. Continuous calibration, possibly with AI help, can improve accuracy. For example, if a certain mobile carrier’s network often misreports location for a split second and triggers false alarms, the system might learn to accommodate that quirk.

For Regulators and Enforcement Bodies: (Not the primary audience of the article, but briefly mentioning expectations for them to improve the ecosystem could be relevant.)

• Regulators can help by setting clear guidelines on what technological measures are expected. They might work with industry to update technical standards as new threats emerge (for instance, requiring detection of GPS spoof apps explicitly, if that becomes a big problem).

• They should also consider information sharing among jurisdictions. If a proxy betting scheme is busted in one state, sharing details with others (and with federal bodies) can prevent it from migrating.

• Enforcement should be fair but firm: penalize lapses sufficiently to deter negligence, but also recognize operators that take swift corrective action. Encouraging a culture of compliance means rewarding transparency — for example, some regulators reduce penalties if the operator self-reported and handled things properly.

For Sports Leagues and Integrity Units: (Again tangential stakeholders, but since sports integrity was mentioned, a note for them too.)

• Sports organizations can collaborate with sportsbooks to identify when unusual betting might involve their athletes or staff. Many leagues now have integrity monitoring that flags if, say, a proxy betting pattern might involve a player. Continued partnership and data exchange (within legal privacy limits) can help nip such problems early and impose discipline on the sports side (like the athlete suspensions we discussed). This in turn reinforces to everyone that proxy betting for prohibited persons is likely to be exposed and punished from multiple angles.

By following these recommendations, each stakeholder fortifies the system a little more. Sports betting, when well-regulated, can provide a safe and exciting form of entertainment. The challenges of geolocation fraud and proxy betting, while formidable, can be managed through vigilance, smart use of technology, and cooperative effort. Every successful prevention or enforcement action not only protects one operator, but also strengthens the integrity of the market as a whole.

Conclusion

Geolocation fraud and proxy betting represent a convergence of old tricks and new technology, challenging sportsbooks and regulators in equal measure. These practices, if left unchecked, can erode the fundamental trust that underpins legal sports wagering – the trust that all bettors are playing by the same rules and that operators are safeguarding the boundaries set by law. The international examples we’ve explored, from American states to European nations and Asian gaming centers, all echo a common lesson: constant vigilance and adaptation are required to stay ahead of those who seek to game the system.

For regulated sportsbooks, the stakes could not be higher. A single breach can carry financial penalties, legal jeopardy, and public relations fallout. But the industry’s response has shown that it is up to the challenge. By leveraging cutting-edge location verification, device intelligence, and data analytics, operators are making it increasingly difficult for fraudsters to hide in the shadows. At the same time, a commitment to rigorous compliance protocols and staff training ensures that even the cleverest schemes have human eyes watching for mistakes.

Regulators worldwide have made their expectations clear: only bona fide bettors within lawful jurisdictions should be able to place bets, and anyone or anything that attempts to undermine that will not be tolerated. Through fines, regulatory actions, and cross-border cooperation, they have backed those words with enforcement. Looking ahead, as sports betting continues to grow and new markets come online, we can expect regulatory frameworks to become even more harmonized in demanding robust geolocation controls and anti-proxy measures. Emerging technologies like artificial intelligence, improved biometrics, and perhaps blockchain-based identity systems may further bolster defenses in years to come.

Ultimately, protecting sports betting from geolocation fraud and proxy betting is not a one-time effort but an ongoing process of risk management. Sportsbook operators must keep updating their playbook just as quickly as the fraudsters update theirs. The good news is that the tools and knowledge at the industry’s disposal have never been better.