Mohegan Sun Casino faces COVID-19 insurance claim loss
June 11, 2022
The Mohegan Sun Casino & Resort in Uncasville, Connecticut, is the latest gaming establishment to be denied insurance compensation for losses incurred as a result of the COVID-19 pandemic crisis.
The Mohegan Tribal Gaming Authority sued its property insurer, Factory Mutual Insurance, a year ago this month. The Mohegan Tribe maintained that its property insurance should cover the financial damages experienced as a result of the pandemic's business disruptions.
The tribe claimed that the insurance policy for its casino resort provided provisional coverage for "communicable disease response."
However, Connecticut Superior Court Judge Cesar Noble issued a ruling this week stating that the FM agreement is only applicable to damage done to physical property. Hence, FM is not legally obligated to provide Mohegan Sun coverage because the pandemic crisis itself did not cause any physical damage to the 364,000-square-foot casino areas or the rest of the resort.
The decision made by Noble is just another setback for casinos who were hoping to collect property insurance payouts as a direct result of the outbreak. To this day, no court has ordered an insurer to pay out property coverage for physical damage caused by the coronavirus. Nevada judge handed down a similar sentence to Circus Circus on the Las Vegas Strip.
Tribe action evokes suspension
During the height of the pandemic, the state ordered the closure of every commercial casino. Mohegan Sun, on the other hand, shut down voluntarily it is immune from Connecticut state restrictions since the facility is owned by the Mohegan Tribe.
In order to restrict the transmission of the virus, the Connecticut tribal casinos have agreed to shut down their gaming and resort operations in March 2020. Noble, however, maintains that more than two years later, such voluntary activities provide the legal basis for ruling against Mohegan Sun in its FM lawsuit.
“The complaint seeks damages for breach of an insurance contract, as well as for FM’s bad faith in failing to pay for economic loss, occasioned by the closure of the Authority’s operations due to the immediately impending presence of coronavirus at its insured property,” Noble stated in his ruling.
“The Authority alleged in its complaint that the closure of the Resort property was done to prevent the immediately impending actual presence of communicable disease at the Resort by preventing guests who were infected with COVID-19 from entering the premises.”
According to the judge, coverage would be "erroneous" because Mohegan Sun's complaint did not mention "physical loss or damage," as needed under the section on Communicable Diseases.
Aside from that, the Authority failed to adequately claim its operations were suspended owing to the "actual, not suspected, presence of COVID-19 at the Resort," said Noble. "FM's move to strike the case is granted in its entirety," Noble said in his final statement.
Mohegan Sun’s renovation
Mohegan Sun saw tens of millions of dollars drop in operational revenue in 2020. However, there is still enough money available for the tribal land to carry out its repair plans.
The Mohegan Tribe plans to spend $15 million renovating Royal Suites and building a new VIP Lounge and Bar measuring 6,500 square feet within their "Casino of the Earth." The 18-hole championship golf course will also be renovated with a budget of more than one million dollars.