https://www.reviewjournal.com/business/casinos-gaming/analyst-mgm-losing-4-2m-8-4m-a-day-because-of-cyberattack-2906379/

 
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Casinos & Gaming

Analyst: MGM losing $4.2M-$8.4M a day because of cyberattack

With many computer systems still down a week after the attack began,
the company has no update on a return to normal operations.

MGM losing millions per day
[rick_velotta_]
By Richard N. Velotta / Las Vegas Review-Journal
September 17, 2023 - 5:30 pm
 icon-x  
 
Updated September 17, 2023 - 6:33 pm
Guests walk through New York New York past a sign about MGM's
"unforeseen difficulties&quo ...Guests walk through New York New York
past a sign about MGM's "unforeseen difficulties&quo ...
Guests walk through New York New York past a sign about MGM's
"unforeseen difficulties" on Friday, Sept. 15, 2023, in Las Vegas. A
cybersecurity attack is still disrupting hotel and casino operations
MGM Resorts International and Caesars Entertainment. (Ellen Schmidt/
Las Vegas Review-Journal via AP)

MGM Resorts International could be losing between $4.2 million and
$8.4 million in daily revenue and around $1 million in cash flow
every day it's under a cyberattack, a gaming industry analyst said in
a Sunday report to investors.

David Katz, an equity analyst with New York-based Jefferies Group, in
a weekly report on gaming, lodging and leisure companies, updated his
Thursday assessments of MGM and Caesars Entertainment Inc. that
included an estimate that MGM could take a 10 percent to 20 percent
hit on revenue and cash flow "for the days that the current
conditions exist."

MGM on Sunday entered its second week of operations after a
cybersecurity breach. Jefferies analysts say MGM generates about $42
million in revenue and $8 million in cash flow daily companywide.

Revenue is the amount of money generated through sales and
investments, while cash flow measures net cash and cash equivalents
being transferred in and out of a company.

MGM officials on Sunday said there were no updates on the status of
the company's computer systems and no new information was posted on
the company's "frequently asked questions" internet page that
launched early Friday.

But there was no shortage of complaints from people about the
situation.

There were scattered emailed reports from people around the country
to the Review-Journal saying they were MGM employees who hadn't been
paid as of Friday. The company said Friday that payroll had been met
as planned.

Others complained that there were no useful functions on the restored
websites. Customers can still make reservations by calling a property
directly or by using third-party booking apps.

A Review-Journal reporter dining at Babette's Steakhouse at Park MGM
said a waiter indicated the restaurant's computer system was
continually slowing because checks can't be closed out. In addition,
all food has to be ordered at one time because expense tabs can't be
reopened. There's also no splitting checks within a party and no
splitting of payment methods.

Slot machine winnings on machines in operation had to be paid
manually by employees because some ticket in-ticket out systems
weren't functioning.

Uber and Lyft drivers contacted by the Review-Journal said MGM's
problems were a constant topic of frustration with their riders. Some
said they waited a long time for employees to pay their slot-machine
winnings.

Groceryshop 2023, a three-day, technology-meets-supermarket-brands
convention with a projected attendance of 5,000, is scheduled to
begin Tuesday. Representatives of Groceryshop 2023 did not respond to
emails inquiring about the status of the show and whether they
expected attendance to be affected by the cybersecurity problems
experienced by MGM.

Brands like Kroger, Walmart, Albertson's, Costco, Amazon, Kellogg,
General Mills, Doordash, KraftHeinz, Coca-Cola and Pepsico are
expected to be represented at the show.

Katz told investors in his Thursday and Sunday reports that damages
from the cyberattack at MGM would be claimed against insurance, but
it's unclear just how much would be covered.

"The announcement by CZR (Caesars Entertainment, which reported a
similar cyberattack in an SEC filing Thursday) and indications from
MGM confirming the cyberattacks should be taken as one-time, largely
insurable events that should not have long-lasting impacts on the
businesses, assuming that the event is short-lived," Katz wrote. "Our
sense is that MGM's impact could potentially be material but moderate
near term, while CZR should see no meaningful impact and the question
of whether any business is displaced among operators near term is
fair."

Katz said there were unconfirmed reports that Caesars paid around $15
million in ransom money to extortionists to regain control of its
computerized systems in late August. But it's unclear if MGM has
considered paying any ransom money.

"Our impression is the Street's presumption that CZR elected to pay a
ransom while MGM did not may not be correct, according to our
discussions with both management teams," Katz wrote. "Nonetheless,
given what we expect should be predominantly insurable events for all
concerned should mitigate the impact to MGM if it turns out to be
significant.

For the time being, it is not clear what the magnitude of the impact
is to MGM and the degree of insurance coverage it will have or the
duration of the event."

Katz said he believes MGM will continue operations.

"Our impression of the impact to MGM is that business remains
operable and credit card use is possible, albeit manual, while more
transactions are cash-based than usual," he said.

Contact Richard N. Velotta at rvelotta@reviewjournal.com. Follow
@RickVelotta on X. Review-Journal reporter Sabrina Schnur contributed
to this report.

Posted on: Business, Casinos & Gaming, Local, Local Nevada, The Strip
Tagged: Has Video, mc-business
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