Casino operators large and small battle insurance firms over COVID-19 interruption claims By Howard Stutz, Executive Editor, CDC Gaming Reports August 22, 2020 at 5:00 am The San Diego Indian Tribe that operates the small Jamul Casino might want to give billionaire Phil Ruffin a call. The owner of Circus Circus and Treasure Island on the Las Vegas Strip could be a source of information. The Jamul Indian Village is suing a wholly-owned subsidiary of American International Group (AIG) over the denial of coverage for the east San Diego County casino’s losses from its two-month closure due to the spreading coronavirus pandemic. Similarly, Ruffin has sued AIG for rejecting a claim over his losses stemming from the 78-day shutdown of Circus Circus under the same circumstances. He said the insurance policy should cover up to $500 million in physical property damage and $96.77 million in lost income, according to an article in The Real Deal. Ruffin filed a similar claim over Treasure Island’s COVID-19 losses against insurer Affiliated FM. Circus Circus and Treasure Island owner Phil Ruffin Jamul and Ruffin are polar opposites on paper. The small tribe spent nearly a decade to gain approvals for the casino, which doesn’t have a hotel but offers 1,700 slot machines, 50 live gaming tables, and a sports bar dedicated to the late San Diego Padres outfielder Tony Gwynn. Combined, Ruffin’s two Strip resorts have 6,650 hotel rooms and 219,000 square feet of casino space. Ruffin, 85, has a net worth according to Forbes of $2.3 billion and is a close friend and business partner of President Donald Trump. Yet the tribe and Ruffin have parallel viewpoints. Jamul Chairwoman Erica M. Pinto said the tribal government followed local, state, and federal emergency declarations related to COVID-19 when the casino was closed on March 20. Both of Ruffin’s casinos were ordered closed on March 18 when Gov. Steve Sisolak shut down Nevada’s gaming industry because of the pandemic. At issue for both Jamul and Ruffin is whether or not a pandemic-induced closure is covered under business- interruption insurance. The Real Deal reported that there are more 750 lawsuits nationwide pertaining to business-interruption claims from an assortment of companies, including casinos, restaurants, theaters, and sports franchises. Pinto said Jamul’s insurer Lexington Insurance Co., a wholly-owned subsidiary of AIG, didn’t correctly interpret the tribe’s policy. “We have an ‘all risk’ policy, which was intended to cover any and all risks,” Pinto said. “We believe that includes losses related to the pandemic.” The gaming industry has a history related to business- interruption insurance claims. Jamul Tribal Chairwoman Erica M. Pinto Fifteen years ago, Hurricane Katrina decimated the Mississippi Gulf Coast communities of Biloxi, Gulfport, and Bay St. Louis, wiping out a vibrant casino industry. At the time, gaming was required under state law to be over water. Casino barges were washed off their moorings by the catastrophic storm. The Silver Slipper’s barge in Bay St. Louis landed on a nearby Holiday Inn. Two other barges were left sitting along Highway 90. Many insurance companies, however, denied business-interruption claims. Disputes arose about whether property damage in the storm was caused by wind or water. Private insurance policies covered property owners for wind damage, but not for flooding. Beau Rivage in Biloxi, which was closed for exactly one year after Katrina, resolved its insurance claims for more than $600 million. However, Imperial Palace in Biloxi, privately owned at the time, had little storm damage and was able to reopen more quickly than other properties. Its $80 million business-interruption claim was reduced to $6.5 million based only on historical, pre-loss revenues. According to insurance experts interviewed by the Washington Post in early April, many insurers changed the language in business-interruption policies after the 2002-2003 SARS outbreak, which infected 8,000 people, mostly in Asia. Insurance companies paid out millions in business-interruption claims, including $16 million to Mandarin Oriental International. Many added exclusions to standard commercial policies for losses caused by viruses or bacteria. The insurance industry has said business-interruption policies are for fires or a natural disaster, not a pandemic. Pinto said the Jamul policy doesn’t exclude viruses. She said the insurance company included “communicable-diseases” language when the policy came up for renewal last month. “Clearly,” Pinto said, “they know they are wrong, but still don’t want to compensate us for our losses.” Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at firstname.lastname@example.org. Follow @howardstutz on Twitter.