FUNDAMENTALS OF GAME DESIGN, SECOND EDITION
Technical Security
People feel a strong impulse to test the limits of computer software—to see what it will do with nonsensical inputs (such as firing upon their own troops in a war game). Similarly, players often think of ways to do things that the designers never intended or expected. Sometimes these unanticipated maneuvers, such as using the rocket launcher to propel the player upward in Quake, even become standard tactics.
Making unexpected but legal moves is not cheating; one can argue that designers should anticipate these tactics or that testers should discover them. But other forms of cheating, such as hacking the game's software or data files, are clearly unfair. In a single-player game, it doesn't really matter, but cheating in multiplayer games presents a more serious problem. People who wouldn't dream of cheating their close friends in person—say, playing poker around the living room table—happily cheat strangers when protected by the distance and anonymity that an online game offers.
Players have a moral right to expect a fair game when they're playing against other people, and they have a legal right to a fair game as well if they're paying money for the privilege. This becomes even more crucial if they're playing for prizes. Although all game software comes with a disclaimer that the publisher sells the software as is and without any warranty, the moment you start to give out prizes
with monetary value, you must be very careful to ensure that your game is fair if you don't want to end up in court.
The legitimate players aren't the enemy, of course, but the handful of cheaters are. We lock our doors at night not to protect ourselves from the honest majority of the population but to protect ourselves from the dishonest minority. You will have to design your game with the same consideration in mind.