Caesars sues insurers for over $2bn in Covid-19 losses
Casino giant Caesars Entertainment has sued its insurers for refusing to pay its more than $2bn of losses resulting from the pandemic, the latest in a long line of lawsuits against insurers from gaming companies.
The defendants in the Caesars lawsuit, which was filed on 19 March in Nevada district court, include around 35 insurance groups, as well as 22 Lloyd’s syndicates.
The lawsuit states that the Las Vegas gaming and hospitality industry has been ravaged by the pandemic, with casinos the very type of indoor, in-person congregation and interaction that government closure orders and other limitations prohibit.
“As a result, Caesars has suffered significant business interruption losses at its properties, which through the course of the pandemic have mounted to more than $2bn and are continuing,” the lawsuit states.
“Yet despite Caesars paying more than $25mn in premiums (in addition to the millions more paid for coverage in prior years) to secure a top of the line, all-risk policy portfolio providing more than $3.4bn in coverage limits, the defendant all risk insurers have failed to pay a single penny for the business interruption at Caesars’ properties caused by the imminent or actual property damage from the ubiquitous presence of the novel coronavirus known as SARS-CoV-2 and the disease it causes, Covid-19.”
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Caesars is the largest casino-entertainment company in the US, with its properties including casino complexes, hotels, riverboats, race tracks, arenas, event spaces and retail properties. The policies’ covered properties have over 65,000 gaming machines, 3,400 table games, and 47,000 hotel rooms.
The lawsuit states Caesar is covered by two sets of policies as a result of Eldorado Resorts and Caesars Entertainment completing a merger last year. The legacy Eldorado policies provide $900mn in coverage per occurrence and the legacy Caesars policies provide $2.5bn in coverage per occurrence.
The company’s most famous property is Caesars Palace in Las Vegas. The last $500mn excess of $2bn layer of the $2.5bn set of policies only covers Caesars Palace, meaning it has $2.5bn in coverage under those policies and the remaining covered properties have $2bn in coverage.
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The lawsuit said that the policies include no virus or communicable disease exclusion.
It noted that one of Caesars’ insurers, Arch Specialty, added an endorsement to exclude losses caused by a virus, bacterium, or other microorganism and so is not named as a defendant.
Another insurer not named as a defendant, Liberty Mutual subsidiary Ironshore, eliminated coverage by adding a sub-limit providing $0 in coverage for loss or damage caused by “pandemic disease”.
In a footnote, the lawsuit noted Caesars in December 2020 renewed its property insurance coverage and paid $33mn in premiums. This was an increase of 33 percent from the previous policy period, even though Caesars reduced the corresponding coverage limit by 26 percent from $3.4bn to $2.5bn.
“Notably, unlike the policies at issue here, the subsequent policies exclude loss or damage caused by a virus or pandemic,” it said.
Casinos up the ante
The lawsuit follows others from casino owners looking for billions of dollars of payments from their insurers for losses from the pandemic.
Casino owner lawsuits in the past month include Genting suing multiple insurers for $500mn of coverage and Detroit Entertainment suing Zurich for over $270mn in BI losses.
In addition, FM Global has been hit by multiple lawsuits from casino owners in March.
Mashantucket Pequot Tribal Nation is seeking coverage for at least $76mn in losses on an FM Global policy with $1.66bn of limits. Golden Entertainment wants its over $130mn in BI losses to be covered by its FM Global policy that has $1.1bn policy limits per occurrence. And Snoqualmie Entertainment Authority sued for losses under its policy that has $341mn in limit.
These latest lawsuits follow FM Global last year being sued by Mohawk Gaming Enterprises, Treasure Island, and Monarch Casino & Resort.
The insurers on the Alliant-placed Tribal First program, led by AIG, have also been sued by numerous Native American tribes.
In one of those cases the Cherokee Nation in January was granted summary judgment against its insurers, which included AIG’s Lexington, Lloyd’s underwriters, OneBeacon, Sompo International, Liberty Mutual, Axa XL and Chubb.