Cybersecurity Fears Cause Friction Between Cyber Insurance Companies and Online Casino Operators

According to a report from the American Gaming Association (AGA), there are more than 3,000 online casinos in the U.S alone. These online casinos offer video slots, table/live games, specialty titles, sports betting, and lotteries.

Players will rush in and share their information with online casinos. To protect the interest of players, casino operators must obtain cyber insurance. Currently, obtaining a reasonably-priced insurance package is causing unrest amongst them.

Following the Signs

In March 2020, Clubmillion, a popular gambling app that hosted their data on Amazon Web Services, suffered a breach. An error caused the hack and allowed hackers to access the information of more than 200 million players globally. The exposed details are names, IP addresses, private messages, phone numbers, and email addresses. The victims easily became susceptible to bank frauds, identity thefts, and other cyber crimes.

Reports in the cybersecurity sector globally and not only for USA online casinos is that cyber-attacks are a constant. Currently, data infrastructures and similar properties aren't facing the question of if an attack will come. The worrying question is when?

Cyber insurance companies have dumped many land-based casinos because of the rise in cyber attacks. For venues who haven't suffered a security breach, Erwin, who is a seasoned executive, revealed that cybersecurity insurance providers are increasing their prices.

The Risk Factor Keeps on Skyrocketing

CDC Gaming reports that cyber security threats keep on blooming for every form of gambling in the U.S, including the native Indian casinos. In a virtual cyber security summit hosted by TribalHub, Lance Erwin, the Vice-president of the enterprise risk management and operations department for the tribal-casino-licensing San Manuel Band of Mission Indians reportedly confirmed the security fears of the attendees.

"If you’re in Las Vegas or a resort area, you’re not an attractive risk for the insurance industry. It doesn’t matter if you’re Marriott, Hilton or Disney, there’s no love in the cyber world for us right now. Every day, someone is trying to get your information. It doesn’t matter if you’re a large or small tribe or entity, they’re knocking on all of our doors."

Why It Keeps Increasing

Cyber threats come in different shapes including insecure data storage, security faults, and sensitive data leaks. To cyber insurance companies, the threats just keep on coming from both internal and external sources. Online casinos hold sensitive data, insurance companies are reluctant to offer them safety nets.

Status Quo

Overall, cybersecurity threats have increased by more than 1,000% in 2021 compared to 2019. Erwin allegedly stated that “Hackers are getting smarter and they’re looking at the vulnerable for exposure and see the casinos, resorts and hotels as easier targets. Underwriters see this on the front pages and every time something bad happens they keep trying to add zeros to your insurance premiums. The average risk insurance payment is up 82% in one year. As to when this will end and when we will stop seeing these increases are not in sight.”

The Insurance Net for Casino May Keep on Increasing to Deal with Cyber Attack After-effects

The huge risk of offering a safety net caught insurance companies unaware. "They didn’t understand the risk, got burned and had to shell out more money, which insurance carriers aren’t used to. They’re used to taking in more in premiums and having a profit."

Insurance companies are reducing the amount they're willing to insure. Originally, casino operators were able to cover damages up to $25 million. That figure is now down to $10 million. There have been reports that some insurance companies are offering as low as $5 million.

Solving the Issue of Deductible Could Make Safety Nets Available Again

The current insurance deductible is around $250,000 and despite casino operators' willingness to quadruple that amount, it still won't be enough. Insurance companies would have to increase the deductible to $2 million which will lead to aggravation amongst the casino operators.

Wrapping it All Up

Insurance companies and online casino operators need to up their communication and compromise on two factors. That is, the insurance net and deductible. Striking a balance between these two values will provide better protection against iGaming cyber attacks.

Author: Tim is a digital marketer with a deep passion for technology, so obviously, he's studying computer engineering for the fun of it. Tim also loves to swim, play video games, travel, and in-between, read books on sci-fi, fantasy, animal, and business to mix up the experience. 

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