Property loss considerations: Is insuring a casino a safe bet?

January 18, 2024

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By Jay Kramarczyk, Vice President, EFI Global; Paul Gilbert, Director Of Client Relations, EFI Global

Within the U.S., 44 states offer some form of gambling — either in land-based buildings or “floating” large vessels and riverboats, a clever way to bypass local opposition to legalized gambling. Some “riverboats” are stationary buildings staged on water platforms, designed not to move. Casinos have transformed since the 19th century and the property risks have too. In this blog, we will highlight equipment considerations, loss scenarios and more.

Common gaming establishment equipment

Most casinos host an elaborate experience beyond a simple gaming floor. One is typically comprised of a hotel with one or more restaurants, retail stores, performance venues, and for larger establishments like in Las Vegas, grand stage productions.

Each area requires its own assorted equipment. In a hotel, you’d typically find heating ventilation and air conditioning (HVAC) units, boilers, electrical distribution switchgear, fire alarm control and suppression systems, and the like, while in the kitchen, you’d likely find food prep stations, exhaust systems, refrigeration, freezers, as well as grillers and broilers.

Examples of gaming equipment include slot machines, roulette wheels, video poker, lottery terminals, gaming tables, as well as audio, video, lighting and signage, while security-related equipment might include closed circuit television (CCTV) cameras, computers, facial recognition biometric systems and alarm systems.

Loss scenarios

In 1980, one of the most devastating hotel fires in U.S. history happened at a hotel and casino on the Las Vegas strip. The fire, originating from an unoccupied restaurant on the casino’s first floor, was caused by an electrical fault associated with a refrigerated pastry display case. According to the fire department, the restaurant neglected to install heat and smoke detectors, or sprinklers — nor did the large casino hall or high-rise tower.

The fire killed 85 people and injured more than 700, prompting building and life safety committees to rewrite fire safety codes, to protect high-rise hotels by requiring automatic fire sprinkler protection and fire alarm/voice communication systems.

Numerous casino fires have occurred since, even in recent years — such as a 2003 Paradise, NV fire that started when a lit cigarette was flicked down a laundry chute, or in 2021 in Las Vegas when a guest lit candles in a hotel room. The sources of other fires have been less obvious. In 2022, at an under-construction casino in Friant, CA, for example, a gas-related explosion ignited while a contractor installed kitchen equipment.

Common causes of damage and equipment vulnerabilities

Many loss scenarios, such as the deadly Las Vegas fire, stem from improper equipment installation. That fire was ultimately caused by a recipe for disaster that developed over time: an improperly secured fan within the refrigerated display case caused vibration, which then rubbed against the electrical conduit causing galvanic corrosion over time, plus jagged edges and stretched electrical wiring due to poor workmanship during installation. Had the refrigerated case been inspected/maintained regularly, technicians would have likely caught and corrected the issue.

Some losses are due to facility maintenance/installation mishaps, such as the 2022 Friant casino gas explosion. Others occur due to equipment failure. Transformer losses are also common and result in an abrupt loss of power — and subsequent business interruption.

Is insuring a casino a safe bet?

The short answer is yes. Due to the nature of the gamer’s pursuit to ever-increase their odds, casinos invest heavily in loss control. Limiting losses is integral to casino culture because losses hamper profits. As 24/7 operational businesses, casinos utilize the latest security surveillance and always have operators watching — to catch cheats and to ensure footage of accidents, like the commonplace slips, trips and falls, are recorded.

Beyond surveillance, staff members in most departments are present at all hours, too — which is effectively a person who can act quickly in the event of a loss.

Commercial property claims

Adverse weather, improper installation, facility/equipment maintenance and failure, fire sprinkler discharges and cooking fires all impact casinos and hotels. While loss recovery is similar to that of other commercial facilities, the industry is unique because of its gambling floor, collaboration with the gaming commission and speed at which business interruption accrues. Retaining experts who are fully versed in casino mitigation is critical to managing the recovery scope and the carrier’s exposure.

Learn more — read the full commentary paper and explore EFI Global’s solutions.