One of the largest and most prominent casino operators in the country, has begun the arduous task of attempting to regain control of its backend systems following a particularly devastating ransomware attack. The hack has cost the company millions of dollars in lost revenues and caused the operator to shutdown large segments of its core business. Following the release of their financial statements to true extent of the damage has come to light.
Ransomware is becoming a terrible problem across the world, and Federal Group appear to be the latest victim in a long line of targets this year. The online casino have stood firm, and are refusing to cave into the hackers demands. ©TheDigitalArtist/Pixabay
With the influx of new ransomware attack vectors, scammers all around the globe are inundated with opportunities to strike at the heart of high cash-balance companies. They know that the cost of downtime far outweighs the relative demands from the hackers, and subsequently they are prepared to cough up the cash with the hope of receiving a decryption key. Unfortunately, as is the case in many of these criminal actions, the data is never unlocked.
This is the reason why law enforcement agencies around the world that deal with these crimes always advise the target to not pay the ransom fee. It only emboldens the hackers to continue their craft and helps fund them to develop even more sophisticated methods of attack. Federal Group have chosen to take exactly this path, and refused to engage with the hackers and not cave in. This brave approach essentially means writing off the loss and preparing for the future.
With the hard hits the company has taken over the past 12 months due to the pandemic and the hack, Federal Group reported their worst financial performance for over 20 years. Despite still clearing $547 million with a net profit of $42 million. Closures to the casino and damage caused by the hack will only be short-term losses that can be easily recovered when the business begins to adequately plan for the future.
Federal Group Runs a Multitude of Business Units
Aside from the core casino business, Federal Group has built a highly profitable business model incorporating a number of key leisure and hospitality verticals. There are big ownership monopolies held by Federal Group that put them in a highly commanding position when thinking about long-term dominance in the market. The assets they hold include lucrative licenses for all gaming machines, which currently make them the only approved vendor of gaming machines. However, this monopoly is likely to unravel in the next year due to them losing the right to exclusively.
In a barter deal with the corporation, the Tasmanian tax authorities came to the arrangement that Federal Group would be subject to a lower tax liability and able to bypass some of the taxes that had previously been levied against them. This tit-for-tat trade has many benefits for both parties, firstly because there are tremendous gains in the short-and-long-term to be gained from working together to keep this profitable company operating from within Tasmania.
The flagship venue at Wrest Point in Hobart has served as a breeding ground for casino executives in Australia. Opening back in 1973, the casino was considered the beginning of a new age of Australian casinos, and quickly became one of the most successful projects operating outside the mainland, raking in millions of dollars of cash each year and rapidly expanding its customer base.
With the tumultuous financial landscape in platform software companies in iGaming, it is proving much better for casinos to consolidate their land-based businesses before embarking on a major expansion into lesser desirable sectors. The last decade has witnessed the unimpeded influx of foreign capital into the Australian gambling sector, and the proposition this has secured for future stability is compelling. But as analysts across Asia have warned, these days are numbered, particularly with the tightening of China’s foreign capital-flight laws.
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