Phil Ruffin Suing Insurance Companies Over Denied Treasure Island, Circus Circus Claims

Posted on: July 19, 2020, 03:03h. 

Last updated on: July 20, 2020, 01:48h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

Billionaire Phil Ruffin is suing two insurance companies that have denied claims filed for alleged damages at his Las Vegas Strip casino resorts.

Phil Ruffin Treasure Island Circus Circus
Phil Ruffin — seen here seated on the left next to former MGM Resorts CEO Jim Murren signing the purchase contract for Circus Circus — is suing two insurance companies. (Image: Treasure Island)

Treasure Island and Circus Circus, both owned by the real estate tycoon, have each filed claims with their respective insurance providers for financial damages related to the COVID-19 pandemic. The casino claims were denied, prompting Ruffin to take the companies to court.

The casinos are thought to be the first gaming properties to sue their insurance companies in the wake of the coronavirus crisis.

Nevada Governor Steve Sisolak (D) ordered all casinos in the state to suspend operations in mid-March. They were allowed to reopen in reduced capacities and numerous health safety measures in place beginning June 4.

Land-based gross gaming revenue (GGR) totaled $0 in both April and May. Nevada casinos won $1.9 billion during those same two months in 2019.

Coronavirus Insurance Coverage?

Ruffin has owned Treasure Island since 2009 when he purchased the Strip resort from MGM Mirage for $775 million. The 85-year-old acquired Circus Circus last year from MGM Resorts for $825 million.

The timing on the Circus Circus purchase was poor, though the pandemic was entirely unforeseeable. Ruffin believes his insurance policies warrant some sort of coverage in relation to the coronavirus emergency.

Bloomberg Law reports that insurance carriers have “broadly denied” claims for business losses during the pandemic. The insurance companies argue that there’s a lack of “physical property damage,” and that “there’s no need for coverage if the virus isn’t there to cause damage.”

The legal media outlet cites a case in Michigan where a state judge rejected a lawsuit from a restaurateur that the state limiting the establishment to delivery and takeout resulted in damages that should be covered under the policy.

Legal experts say casinos could have a better argument, as they were required to fully close.

“Casinos — particularly those in Las Vegas — have been impacted more severely,” attorney Michael Levine, a partner at Hunton Andrews Kurth LLP in Richmond, Virginia, told Bloomberg Law.

Casino Claims

Ruffin’s two Las Vegas casinos claim the coronavirus was indeed physically present in his resorts.

Filed in the United States District Court of Nevada, Circus Circus argues that insurance company AIG sold it an “all risks” policy that is supposed to cover “direct physical loss or damage to Insured Property.”

The casino says the policy provides up to $500 million in coverage for physical loss or damage of property and up to $96.7 million in coverage for loss of business income.

Persons infected with COVID-19 were present at Circus Circus prior to March 18, 2020. In fact, during the period January 1, 2020, to March 18, 2020, Circus Circus employees recorded more than 1,600 sick days,” the complaint adds. “During that same period, Circus Circus had more than 337,000 registered guests from all over the world.” 

Circus Circus is seeking coverage for “the losses it has sustained because of physical loss,” and for “the loss of income and extra expenses sustained.” The casino is additionally seeking $75,000 from AIG in legal expenses.