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DraftKings Hack Leads to $300,000 in Losses, Rattled Customers

DraftKings Hack Leads to 0,000 in Losses, Rattled Customers

Posted on: November 22, 2022, 02:57 am.

Last updated: 22 November 2022, 02:57.

DraftKing’s ( NASDAQ:DKNG ) investors and customers were spooked Monday after the sportsbook operator confirmed that some customer accounts were hacked by cyber thieves.

DraftKing's hack
DraftKing sportsbook at Brook Casino. The company said a hack of client accounts resulted in less than $300,000 in losses. (Image: Getty Images)

The Boston-based gaming company said late Monday that less than $300,000 in client funds were affected by the cyber breaches. While the goal is perfection when it comes to prevention, perfection is a moving target when it comes to cybersecurity and $300,000 in losses is small compared to other well-known cybercrime events.

We currently believe that the credentials of these customers were compromised on other websites and then used to access their DraftKings accounts where they used the same credentials,” DraftKings co-founder and president Paul Liberman said in a statement. “We have seen no evidence that DraftKings’ systems were breached to obtain this information. We have identified less than $300,000 of customer funds that were affected, and we intend to make whole any customers that were affected.”

It is believed that fewer than 100,000 DraftKings customer accounts were affected. The company added that it found no evidence that its internal corporate systems were compromised during the attack.

DraftKing’s customer confidence could be rattled

Assuming the aforementioned estimate of $300,000 (or less) is on par, it’s not massive in terms of cyber losses, but DraftKings may have to deal with fallout that affects consumer confidence.

It makes sense because, like it or not, gaming companies have to act as custodians of client data because they have so much of it, including bank and credit card information, addresses and dates of birth.

In a note to clients today, Susquehanna analyst Joseph Stauff said such an event at an online gaming company was “inevitable” because of the amount of capital flowing in and out of client accounts. He added that the biggest fallout from the phishing attack will likely be on DraftKing’s user trends and confidence.

Stauff rates DraftKings stock “positive” with a $19 price target, suggesting about 35% upside from Monday’s close.

Gaming companies need to spend money on online security

Over the past few years, there have been several examples of cybercriminals targeting gaming companies of all shapes and sizes. As efforts become increasingly online, the number of attacks is likely to increase.

That is, gaming companies, especially those that generate most of their revenue online, have no choice but to invest diligently in cyber security.

Those who don’t risk inviting data breaches, and with that the risk becomes the possibility of harsh judgment in the court of public opinion and in the investment community.

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