Insurance Differences Between Online and Land-Based Casinos

A rookie mistake, although popular, is thinking that the nature of the casino business means they are too risky to be insured. However, it is this risk that necessitates casino insurance. While most insurers typically steer clear of casinos, there are a few that offer tailor-made insurance at a premium for people in the gambling industry, online and brick-and-mortar alike. The question, however, then becomes, how do these insurances compare? Are they pretty much the same? Does the online nation of iGaming outfits make it easier to insure, or does the presence of landed infrastructure swing the pendulum? Let’s find out.

But first…

What is casino insurance?

Casino insurance is simply like auto (car) insurance or home insurance; only this time, the casino takes out the insurance. By definition, it is a series of policies designed to protect the casino from reputational damage, its employees, assets (physical and digital), and its stakeholders from different forms of risk. Whether online casino or brick and mortar establishment, there are a number of risks being faced by the business that, if not adequately insured, could stunt the growth of the company and, in the worst case scenario, lead to bankruptcy. 

It is easy to believe that online casinos face less risk because they do not have to worry about physical assets being compromised, but that can not be further than the truth, especially when you consider high-profile cases where online casinos have lost significant amounts of money to crippling hacks. Events like the Primedice hack in 2014, where the hacker manipulated the company’s probably fair system and made way with 2400 BTC, $1 million at the time, quickly put things into perspective. Brett Curtis shares that “any top-rated casino with a license provides games that are completely safe and fair to play” (source: https://www.techopedia.com/gambling/uk/best-online-casinos-uk) and many online casinos have learned from that event and others like it to ensure players are completely protected, it easily shows the importance of having casino insurance, the right type, too. 

Hacks are not unique to online casinos brick and mortar casinos have had their fair share of hacks, with one of the most recent happening to one of the more popular names in the gambling world, the MGM Resort and Casino at the famous Las Vegas Strip. The hack, reported to have cost the casino over $100 million, took over a week for the casino and hotel to recover from, with most of its services unavailable during the period. The hack was very damaging to the company’s reputation, especially when it revealed that the hackers had accessed possibly millions of customer data like their names, birth dates, gender, contact information, and social security numbers.

Any way you choose to spin it, insurance is crucial on either side of the aisle. The board of online casinos and more traditional establishments will sleep easy knowing that they have insurance. But surely brick-and-mortar casinos can have different types of insurance?

Types of insurance available to casinos

There are a number of insurance types that you need to pay some attention to if you are looking to start a casino business. They include but are not limited to the following: 

Commercial Property Insurance

Commercial property insurance is used to cover property that’s been designated for commercial use from damage. As long as it is being used commercially, it can be covered for fire damage, natural disasters, and theft, among others. This property can be any of the following:

• Buildings that are rented or owned to carry out business, including store your servers
• Crucial company documents, including accounting records
• Office equipment. It can include furniture, telephones, and computers.
• Boards and satellite dishes

This means that while commercial property insurance is needed more by land-based casinos, it would be very beneficial for online casinos that have their own designated servers and the necessary equipment to keep them running.

Liability Insurance

Liability insurance helps to protect the business when it is legally responsible for third-party injury and property damage. A common example is a trip or fall at the place of business, which helps cover medical expenses and other compensations. Again, it is more common with land-based casinos, but that does not mean there’s no use for it at online casinos. 

For example, if your online business suffers from a breach, you will be liable for the damages caused by said breach and will need liability insurance.

High Limit Insurance

When players win huge sums of money, insurance coverage like this ensures certain companies do not file for bankruptcy. Important for both online and land-based casinos, it helps protect the business from substantial claims or large losses. It exists to ensure that the casino’s bottom line is unaffected, with some insurance companies providing coverage up to $150 million, depending on the situation. It is a win-win situation for all the parties involved; the casino does not need to empty its coffers, and the winners get to leave the establishment with their prizes. 

Cyber Risk Insurance

Known also as cyber insurance or cyber liability insurance, it shields businesses from financial losses that can be incurred from cyber-attacks and data breaches. The MGM hack mentioned above, which cost $100 million, would have been shouldered by the insurance company if the resort had a cyber insurance policy. The insurance policy protects against ransomware attacks and cyber terrorism and helps with data recovery, customer notifications, attack remediation, system damage repair, and any other liability for losses. 

While it will find more use with online casinos, land-based casinos also have some online services that can be disrupted in the event of a hack, and as a result, they need to have some form of cyber risk insurance in place. 

Workers Compensation Insurance

This insurance policy covers workers who become injured or fall ill on the job. It is expected to cover the medical costs, lost wages during the period they are infirmed, and any other healthcare needs. This insurance policy is more popular with land-based casinos as they have more staff employed and physically around on business grounds. Online casinos, however, do not need as much staff but might still need some form of worker comp insurance to ensure they do not open themselves up to liability. 

Crime Insurance

Crime insurance is a policy taken out to protect the business from liability in the event that a crime is committed on the premises. This can be external criminal acts like armed robbery or losses due to staff dishonesty and misleading casino patrons. Crime insurance is typically commonplace at brick-and-mortar establishments. 

Conclusion

The overlap in insurance types shows how much of a convergence there has been between both gaming submarkets. The steady rise of online casinos now means even land-based casinos have online services that require them to protect their image online, the same way an online casino would. Also, the presence of physical servers and massive data centers means online casinos are technically land-based and need to protect their commercial assets from the damage the same way land-based casinos would. Regardless, one thing is clear: both gaming options need insurance and continue to show great dedication to ensuring consumer safety.