Don't let the thousands of guest rooms fool you, insuring a casino involves many risks that aren't a part of the typical hospitality program.

"People tend to lump them in with hotels, but they're really integrated entertainment companies," according to Wayne Herrington, practice leader for casinos at Willis.

Willis is in a position to know about the exposures facing casinos, he added, as the mega-broker represents many of the world's largest gaming companies--including Harrah's, MGM Grand, Wynn, Caesar's and the Isle of Capri.

Instead of being viewed as hotels with some added business in the front, Mr. Herrington said that gaming companies need to be looked at differently, as they have different risks.

The risk managers who work for these firms are typically very well trained, he noted--in part because gaming is a heavily regulated industry. Even simply obtaining a gaming license, he said, is "an onerous process."

While casinos do face many of the same risks that other businesses do, including property and liability, gaming companies must also deal with other more unique areas of exposure--such as nonowned transportation.

"Most casinos bring in players on nonowned aircraft, limos and other vehicles," he said, noting that one casino set up its own company just to manage the travel it booked for players, arranging between 500 and 600 trips in a single year. "It's one of those things you don't think about, but is very important for casinos," he explained.

Another important risk for casinos is in information technology--specifically, protecting player data. The programs at many casinos in which players swipe cards as they play to receive bonuses are a "win-win" for players and casinos, Mr. Herrington said, by making it easier for players to earn complimentary meals and other rewards and providing "a goldmine of data" for casinos to help keep gamers happy, learn how they play, and--most importantly--how to adjust their business to keep consumers coming in the front door.

Some casinos, such as those built on Native American lands, also have unique advantages that can help reduce the costs of their insurance coverage. Because tribes are considered sovereign nations, tribal casinos are run according to a compact that is negotiated between the states, the tribe and the federal Bureau of Indian Affairs.

"The compact will spell out how they interact with the laws of the state," including insurance rules, he said, and can provide opportunities. As an example, Mr. Herrington said that a casino in California could be able to place a limit of 30 days for how long a worker has to file a workers' comp claim, as opposed to the indefinite period that a non-tribal business would have. "That's a huge advantage," he said.

As a result, Mr. Herrington noted that a few companies have established themselves as dealing specifically with Indian casino risks, and that the market for such coverage is very competitive. "It's a lot more competitive than non-tribal," he said.

Special Reports /

Insurers Take The Odds On Casino Risks

Related Stories

Recommended For You