Chip dumping

Like any other card game, poker is not entirely safe from being exploited by the bad faith of players looking for means to cheat the rest of the participating players, not to mention the supervisors and the poker room itself. Many forms of poker traps can be found in operation today.  

One of the most prevalent poker traps is called “chip dumping.” Put simply, this refers to a form of collusion where one or more participants at a poker table purposefully transfer chips to another participant, typically through deliberate folding.

In online gaming, players may use this chip dumping technique to abuse bonus promotions and loyalty programs or to launder money, among other reasons.  

What is chip dumping? 

Chip dumping is when a player at a poker table intentionally loses their chips or credits them to another participant in an attempt to transfer funds to that player’s account. The participant receiving the chips could be someone colluding with the dumper or one of the fraudster’s multiple accounts. With the latter option, the fraudster creates fake accounts that intentionally lose to a specific, pre-determined one. 

Players participate in chip dumping for various reasons.

1. Help a friend: Sometimes, they do it to offer a chip advantage to a peer. For instance, a participant may chip dump to a friend to keep them alive during a tournament. 
2. Bonus abuse: Chip dumping is also done to exploit bonus promotions in a poker room. In such a case, players sign up at gambling platforms for bonus offers and “lose” money to their other accounts to cash out the offers, completing their playthrough requirements (without really doing so). 
3. Money Laundering: Chip dumping also serves a rather sinister purpose for fraudsters: money laundering, with many past, recorded instances of the activity. In this instance, chip dumping transfers “dirty money” from one account to another. This helps hide the money’s trail to “launder” it, with the player account functioning similarly to a bank drop account. 

Why is chip dumping a problem? 

Chip dumping, besides other types of specialized fraud like matched betting, significantly impact the online gaming industry. Such activities cost companies time, money, and other valuable resources due to the practices themselves and the obligation to enforce measures to mitigate them. 

According to a CNBC article citing data from a TransUnion report, in Q2 2021, the number of online fraud attempts in the gaming sector worldwide went up 393% year-over-year. Moreover, the gambling fraud rate in the US came close to 262% during that same period.   

As far as individual games are concerned, chip dumping can take away from the quality of the gaming experience for participants not involved in the collusion. Not only does it violate the spirit of the game, ruining the other players’ gaming experience, but it also affects the fairness of the game. The image of the poker room offering the experience is also damaged; if players know they might not be playing on a level playing field, they are unlikely to return. 

Is chip dumping illegal? 

While no specific law defines the act as illegal, it is still strongly discouraged. Regarding chip dumping linked with bonus abuse, it is always against an operator’s terms and conditions. However, since it is illegal to launder money, chip dumping involving such activity is strictly against the law.  

Overall, if players get caught in chip dumping, their chips and money could be confiscated, and their user accounts could be permanently banned. If money laundering is involved, there is also the real possibility of serving jail time. 

Examples of chip dumping  

The most common chip-dumping scenarios include the following: 

Tournament play 

Suppose a player (Player A, the leader) enters themselves and four others into a tournament. Whenever seated at Player A’s table, the four other players must dump chips at their leader. Doing so lets Player A gather a stack without risk and, as a consequence, has a better chance of winning the tournament.  

Depending on the players’ level of expertise, detecting chip dumping at a tournament can be very easy or difficult. Players who wish to do this without being detected will seek to make decisions that follow some poker logic.  

Bonus abuse 

Some poker rooms offer bonuses to attract newcomers. Such bonuses usually cannot be withdrawn until the player has paid a certain amount of commission.  

Suppose Player X has received a bonus worth €100 frozen in their account. They join a heads-up table with a friend, Player Y, who also has €100, but the money is withdrawable. Player X raises the preflop to €99, and Player Y pushes all in. After that, Player X decides to fold, with Player B pocketing €99.  

Player Y then proceeds to withdraw Player X’s money because it is no longer frozen and in Player Y’s account. Player Y then shares the money with Player X after cashing out. Read more about bonus abuse in our ‘Exploring bonus abuse in online gambling’ blog.

How to prevent chip dumping as a gaming operator

Operators committed to mitigating chip dumping and other types of fraud must employ a comprehensive prevention strategy addressing all aspects of online gaming fraud.  

Safety procedures, including KYC verification checks with document verification, biometric checks, and live video identification, can effectively fight iGaming fraud and meet the full range of regulatory requirements set by relevant authorities. 

Companies can also execute measures to detect chip dumping as it happens. For example, flagging inconsistently large bets or repeated losses to the same opponent. 

Here is a list of measures that can help prevent or reduce chip dumping:  

1. Tracking and Analyzing Player Behavior: Utilize sophisticated systems for real-time monitoring and analysis of player actions, detecting unusual betting behaviors and interactions between accounts.
   
2. Strengthening Identity Verification: Enhance identity checks during account registration and fund withdrawals by employing KYC (Know Your Customer) and AML (Anti-Money Laundering) procedures.
   
3. Setting Withdrawal and Deposit Limits: Implement limits for withdrawals and deposits based on player behavior and risk assessment to mitigate chip dumping and control money transfer amounts.
   
4. Collaboration with Authorities: Engage in cooperation with both local and international authorities to promptly report and investigate any suspicious activities, sharing relevant information as needed.
   
5. Utilizing AI and Machine Learning: Harness AI and machine learning technologies to identify abnormal gaming patterns and potential instances of money laundering.
   
6. Partnering with Other Gaming Platforms: Collaborate with fellow gaming platforms to exchange information and tactics for combating fraudulent activities.
   
7. Regular Audits and Internal Checks: Conduct routine audits and internal assessments to ensure the efficacy and currency of security measures.

As stated, fraud detection can be easy or difficult, depending on the wrongdoer’s expertise. However, the right combination of detection tools, knowledge sharing, and fraud prevention can help operators implement robust defenses.