Saving a million dollar deal
The one on Sports betting casinos The specialized gaming service provider SBTech was instructed by its shareholders to set aside the equivalent of around 28 million euros in cash and shares. The deposit should be in place for at least two years and be used to settle any liabilities that may result from a recent cyber attack. The amount of the reserve was agreed upon together with the US Securities Exchange Commission (SEC).
The deposit was requested by the DiAmond Eagle Acquisition Corporation (DEAC) and is considered to be the salvation of a million-dollar deal. At the end of 2019, the investment company announced that it would unite SBTech with the daily fantasy sports provider DraftKings. The hacker attack occurred in the middle of the merger process. The shareholders' meeting to approve the transaction was originally scheduled to take place on April 9th, but has now been postponed to April 23rd.
The DEAC also stated that it would demand an additional $70 million in reserves if the $30 million deposit is not sufficient to offset the expected recourse claims as a result of the cyber attack. If the costs exceed the $100 million mark, the difference will be claimed from the current shareholders. The aim is to “cover certain compensation obligations in connection with a cybersecurity incident”.
Cyber attack at the end of March
The incident in question occurred at the end of March. A hacker tried to paralyze all of SBTech's data centers, but according to the company, this did not lead to a data breach, but rather to the systems being shut down. Hundreds of international partner websites were affected by the shutdown for 72 hours starting Friday (March 27). It was only three days ago that SBTech confirmed that it had fallen victim to a cyber attack.
In particular, SBTech websites in the USA were affected. For example, Churchill Downs' BetAmerica-branded sports books in Indiana, New Jersey and Pennsylvania are still offline. The European websites of the originally Bulgarian provider are online again. The same applies to the Oregon Lottery scoreboard page, which was also affected.
Since the damages amount to several million, the DEAC called in the named reserve in order to safely complete the $600 million merger with DraftKings. According to statements from the news magazine iGamingBusiness, there is so far no indication that SBTech customers have filed claims for damages or are preparing to do so. The developments remain to be seen at this point.
A ransomware attack?
Meanwhile, experts have spoken out. Geraint Williams, chief information security officer at IT services provider GRCI Group, told Legal Sports Report that the incident had the classic characteristics of a ransom attack. We are talking about a so-called ransomware attack. Hackers would try to steal company data and certain coding by implementing malware. Williams explained:
"Companies of this size typically have data resources and backup servers in place to be able to restart their services relatively quickly in the event of a cyberattack. However, if it is a ransomware attack, it can take quite a long time to restore systems and ensure that they are clean."
The expert also explained that the well-known hacker group “Maze” carried out a series of ransom attacks last week. Among those affected was the online sports betting company BetUS, which is licensed in Curaçao. Also the cyber security company Chubb and the French company Bouygues Construction. It is still unclear whether the group was also involved in the attack on SBTech.
Cyber attacks are not uncommon
Especially in the USA, cybercrime is in the context of Online gambling not uncommon. It wasn't until the beginning of March that cyberattacks on Las Vegas occurred again, where around 279,000 attempted attacks are reported every month. In the most recent case, the Four Queens Hotel and Casino and Binion’s Gambling Hall were affected. Both casinos are owned by TLC Casino Enterprises.
The establishments' slot machines were hacked and out of service for six days. Management spoke of a total computer failure. Both casinos were forced to rely on cash and table games.
The provider's websites were also affected and were offline for several weeks as a result. The local gaming regulator NGCB (Nevada Gaming Control Board) intervened and began the investigation in cooperation with the police. In this case it can also be assumed that it is a “ransom attack”.
In Europe, a case hit the headlines in mid-January involving the conviction of a hacker who managed to gain illegal access to 26,000 player accounts in the British National Lottery. The 29-year-old perpetrator had stolen many small sums of money from the accounts. In the end, the amounts totaled 269,000 euros. He is now in prison for nine months.
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