SBTech Sites Still Offline Due to Cyber-Attack

Sat, Apr 18, 2020

The March 27 cyber-attack against SBTech has not been resolved. Several sites remain down, including BetAmerica, Golden Nugget and Resorts Atlantic City. The attack could delay the final votes on a merger with DraftKings and Diamond Eagle Acquisition Corp.

SBTech Sites Still Offline Due to Cyber-Attack

SBTech was hit by a cyber-attack March 27. Some called it a ransomware attack. Whatever the name, it shut down the company’s global data centers. A number of online sites remain out of action.

According to Casino.org, the length of the outage is unprecedented for the industry. While a common occurrence for online gaming operators, the hacking closures tend to be short lived disruptions.

As of April 9, Churchill Downs’ BetAmerica had no sports betting, no casino and no access to funds for customers.

Also down: online sports betting of the Golden Nugget and Resorts Atlantic City. But Oregon Lottery’s sports betting app is back as is MansionBet in Europe.

The attack comes as DraftKings’ takeover of SBTech nears completion. Another player in the merger transaction, Diamond Eagle Acquisition Corp., demanded April 8 that SBTech set aside $30 million in cash and stock to settle any litigation that might arise from the outage. The $30 million is part of the $600 million price being paid to the SBTech owners and held in escrow for two years, according to Legal Sports Report.

According to a filing with the Securities and Exchange Commission, if claims against SBTech exceed $30 million, DEAC would gain access to around $70 million in cash and shares already in escrow. If still insufficient, the company could seek funds from SBTech’s current owners, including founder and majority shareholder Shalom McKenzie.

SBTech is believed in negotiations with clients about appropriate compensation for the downtime. If it is unable to reach an agreement with partners, operators could take legal action.

The duration of the outage, and the slow re-launch of services could mean SBTech refuses to pay any ransom demand. The company said it needs to satisfy U.S. regulators before going back online.

“We will review and confirm that SBTech’s operating systems satisfy all of the division’s performance standards prior to resuming operations,” the New Jersey Division of Gaming Enforcement said.

The outage could cost SBTech’s owners at least seven figures and also delay the DraftKings deal by at least a couple of weeks. DEAC shareholders vote was pushed back to later this month.

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