Caesars files lawsuit seeking more than $2B from insurers over pandemic-related losses

Caesars files lawsuit seeking more than $2B from insurers over pandemic-related losses

  • Howard Stutz, CDC Gaming Reports
March 22, 2021 9:33 PM
  • Howard Stutz, CDC Gaming Reports
  • Other

Caesars Entertainment has sued its insurers over non-coverage of losses associated with COVID-19 pandemic shutdowns and is seeking more than $2 billion.

In the lawsuit filed Friday with the Clark County District Court in Las Vegas, the casino giant named dozens of insurance national insurance companies as plaintiffs in the case. The company disclosed the lawsuit in a filing with U.S. Securities and Exchange Commission Monday.

Caesars said it purchased broad property insurance coverage to protect against “all risk of physical loss or damage” and resulting business interruption, unless specifically excluded by policies. The company wrote in the lawsuit it paid more than $25 million in premiums “to secure a top of the line, all-risk policy portfolio” that provided more than $3.4 billion in coverage limits.

“However, even though the vast majority of the company’s insurance policies do not exclude loss or damage caused by a virus or pandemic, the company’s insurance carriers have refused to pay the company’s losses which are estimated to exceed $2 billion,” Caesars said in the SEC filing.

Caesars is not the first casino operator to file legal proceedings against its insurers over losses due to pandemic-related casino closures. Last summer, Treasure Island and Circus Circus owner Phil Ruffin and a San Diego-area tribal casino operator filed legal claims against their insurers over similar issues.

Last month, U.S. District Judge Jennifer A. Dorsey ruled in favor of Circus Circus’ insurance provider, AIG Specialty Insurance Company, and dismissed the case, according to the Las Vegas Review-Journal.

Caesars’ lawsuit covers losses to both the company’s 15 casinos in Nevada, but also regionally. Caesars operates more than 50 gaming properties in 16 states. All of Caesars’ casinos were closed at times last year as states and tribal governments ordered the shutdowns of nearly 1,000 gaming properties in 43 states in an effort to slow the spread of coronavirus.

All of Caesars’ properties have since reopened but the company said it dealt with business disruptions throughout 2020.

“Government orders have required, at various times, in various degrees and in various locations, shutdowns, lockdowns, facility closures, quarantines, travel restrictions, and operation restrictions, all of which substantially impacted Caesars’ properties and businesses,” Caesars’ attorneys wrote.

In the lawsuit, Caesars said it hired epidemiologists and crisis management advisors to help mitigate the physical loss or damage to its properties. The company drew down $1.6 billion under its bank loans and raised $772 million in new debt to cover ongoing costs to maintain the company.

Caesars furloughed and placed on leave “a substantial number” of its pre-pandemic workforce and reduced salaries of management and “mission-critical” personnel, donated more than $1 million to charitable organizations in Nevada and other regions.

Caesars said in the SEC filing ‘hope remains for an amicable resolution” with the insurance companies.

Caesars declined to comment beyond the SEC filing.

Shares of Caesars closed at $88.47 on the Nasdaq Monday, down 85 cents or 0.95%.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.