MGM Suffers Cyberattack Possibly Resulting in Millions Lost per Day for Casino Firm
The cyberattack that hit MGM on September 10 has been causing a lot of trouble for the casino giant in Las Vegas and other locations. This disruption may be costing the company millions of dollars per day.
David Katz, who's the managing director of equity research at Jefferies, mentioned in a note that the losses could be huge while this problem persists. The casino's website was brought back online last week, but the option to book rooms is still unavailable.
Things have not been smooth at MGM properties. Long lines have been forming at check-in counters, and gamblers cannot use the self-service cashier kiosks to cash in their winnings. Instead, they have to wait for a floor attendant to handle this manually.
According to Katz's estimate, MGM Resorts might be losing up to $8.4 million in revenue and $1 million in cash flow every day, thanks to these service and operational disruptions. He estimates that the revenue and cash flow have been hit by 10%-20% every day until the hack is sorted out.
MGM's 2022 report reveals that they generate about $42 million in resort revenue and $8 million in cash flow every 24 hours in the US.
Cash flow, as per Investopedia, is the money coming in to or going out from a company. Money coming in is seen as inflows, while outflows represent money being spent. A business creates value for its shareholders by generating positive cash flows and enhancing long-term free cash flow.
Ransomware Attacks
Scattered Spider, a group of cybercriminals, has claimed responsibility for the recent hacks on MGM Resorts and Caesars Entertainment. Caesars avoided any interruptions by paying a $15 million ransom.
MGM has decided not to give in to the hackers' demands and pay them a ransom, but they could be in for a battle. Scattered Spider claims that they've captured six terabytes of sensitive data on the two casino companies.
MGM's share price has suffered since the attacks began, and the revenue and cash flow losses have only added to the damage. The company's stock is trading down more than 7% on the New York Stock Exchange since its websites went offline and casino slot machines malfunctioned.
Nobody knows yet what kind of private information the hack could have resulted in, but Caesars confirmed in an SEC filing that their Caesars Rewards database was targeted.
In the filing, they said: "We have incurred, and may continue to incur, certain expenses related to this attack, including expenses to respond to, remediate, and investigate this matter. The full scope of the costs and related impacts of this incident, including the extent to which these costs will be offset by our cybersecurity insurance or potential indemnification claims against third parties, has not been determined."
MGM’s Response
On Friday, MGM Resorts announced that their websites and mobile app were up and running, but in a limited capacity. While it's now possible to make restaurant and nightlife reservations online, room bookings are still disabled.
MGM says that guests with reservations until September 24 can cancel without any penalties. Additionally, those who booked and paid the first night can get a refund of that amount. Guests can also use third-party booking sites like Expedia to book rooms.
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Source: www.casino.org
