The biggest private employer in Tasmania, poker machine operator Federal Group, rejected the ransom demand of a cyber hacker at the time when its systems were seized in April 2021. The hacker attack, however, cost the company quite a lot of money, media reports say.
As revealed in Federal Group’s annual financial statements covering the 2020/2021 fiscal year that were presented to the Australian Securities and Investment Commission (ASIC), the company was subject to a massive cyberattack that resulted in the encryption of several of its systems. The ransomware attack forced the company to cease the operation of its gaming machines and hotel booking system for a few weeks, but the pokies giant confirmed in a statement that its directors decided not to contact the attack’s perpetrator and pay the demanded ransom.
At the time, the operator’s executive general manager Daniel Hanna explained that Federal Group had not quantified the exact cost of the cyberattack but, according to estimates, it would be several million.
Like many hospitality businesses in Tasmania, in 2021 the Federal Group, which is associated with the Farrell Family, has been recovering from the worst financial result in twenty years. The company reported a 17% increase in the direct costs associated with the sale of goods and the provision of services from about AU$147 million in 2020 to a total of AU$164 million in 2021. The group’s consolidated revenue generated from its hotels, pubs, gambling operations, and freight services was worth AU$547 million.
Tasmanian Pokie Group’s Systems Was Down for More than a Week in April 2021
As revealed by the only casino operator in Tasmania at the time, the ransom cyberattack had affected its poker machines and hotel bookings system for more than a week since April 3rd, 2021. So-called ransomware attacks involve a type of malware encrypting the files of the target, with the attackers then demanding that the target pays a ransom before restoring access to the encrypted files. Usually, such ransom is sought in Bitcoin or another type of cryptocurrency.
Dario Mujkic, the casino organiser of the United Workers Union confirmed that many staff members have seen a message seeking the payment of cryptocurrency as ransom.
The executive director of Federal Group revealed that the company had notified the Australian Cyber Security Centre of the incident and remained compliant with all legal and regulatory requirements related to it. At the time, he also noted that both the Australian pokie group and the relevant authorities were investigating the incident.
Following the ransomware cyberattack, some experts explained that gaming and gambling organisations were common targets to hackers because, on one hand, they are cash-based entities, and on the other hand, their systems are usually quite old. This is exactly why hackers believed that building up a sophisticated attack mechanism is worth the effort.
Ended Gambling Monopoly in Tasmania Will Affect Federal Group but No So Much
As far as the finances of Federal Group’s financial state is concerned, the latest report of the company flagged a potential decline in cash flow from next year as a result of the end of its monopoly on gaming licences in Tasmania. The company, however, will keep its operating permits for the two casinos in Tasmania, its keno services, and all the gaming machines in the pubs it owns directly.
After years of Federal Group holding the monopoly on pokies in the state, as of July 2023, local venues would be able to own or lease poker machines on their own. Such venues would no longer be forced to source pokies through the Farrell Family’s group.
According to reports released by the company, the change in the state’s gambling license monopoly would result in a considerable reduction in its future cash flows but there is no corresponding write-down in assets. An expert, who asked not to be named, this could suggest that the company itself was aware that it would probably not face serious negative financial effects in the long run.
- Author
Olivia Cole
