The sports betting platform provider, SBTech has been told by its sellers to put aside millions of dollars in cash and stock in case it needs to settle claims in the future resulting from a cyberattack.
At the end of March, SBTech reported a cybersecurity incident which forced most of its datacenters around the world to shut down. All of the company’s clients went offline for at least a weekend, while some if its US-facing sites still remain offline.
As a result of the incident, however, terms in the $600 million merger deal between SBTech and daily fantasy and sports betting giant, DraftKings, have been amended slightly by sellers, Diamond Eagle Acquisition Corporation.
For starters, $10 million due to the sellers will be placed in escrow for two years, in case any of SBTech’s 50 or so global sports betting giants plan to seek financial compensation during the time their operations were down.
In addition, $20 million worth of stock in the new company will need to go into a two-year lock-up period for the same purpose.
When SBTech first started dealing with the cybersecurity threat, it immediately informed its customers, which include BetAmerica, Golden Nugget and Resorts Atlantic City and Oregon Lottery. It later updated its clients that it had been a target of an attempted ransomware attack but assured them that no data had been breached.
With its sites closed in six US states, including New Jersey, Pennsylvania and Indiana, SBTech had to receive clearance from regulators before it was able to relaunch its US servers.
As of April 9th, Churchill Downs’ BetAmerica site was still out of action and customers were unable to access their funds.
Security analysts have said that the timing of the attack, which comes just weeks before the DraftKings merger, was the work of a sophisticated criminal group.
Shareholders for Diamond Eagle were due to vote on the merger last week, but that date has been pushed forward to this week instead. The deal is still expected to be completed on schedule, despite the attack.
