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Deyan Dimitrov January 25, 2024 3 min read
NJ Supreme Court Rules against Ocean Casino Resort in COVID-19 Insurance Dispute
The court dashed the operator’s hopes, noting that the virus did not constitute the required conditions to allow such a payout
New Jersey’s Supreme Court has ruled against Ocean Casino Resort, stating that the Atlantic City casino is not entitled to payouts from business interruption insurance for losses during the COVID-19 outbreak. Despite the operator’s claims, it has enjoyed positive financial results, successfully rebounding from the pandemic and maintaining its position as one of Atlantic City’s leading venues.
The Operator Failed to Present a Convincing Argument
The case involved Ocean Casino Resort’s claims against three insurance companies: AIG Specialty Insurance Co., American Guarantee & Liability Insurance Co., and Interstate Fire & Casualty Co. These insurers mostly denied payouts, asserting that the casino did not suffer direct physical loss or damage due to the virus. Ocean Casino Resort initially defeated an attempt by insurers to dismiss the case, but an appellate court later reversed that decision.
The New Jersey Supreme Court subsequently took on the case to settle the legal question of what constituted loss or damage. According to its unanimous decision, the company had to demonstrate a direct physical loss or damage to its property, rendering it unusable or uninhabitable. Since the aftermath of COVID-19 failed to meet this criteria, Ocean Casino was not eligible for a payout.
At most, it has alleged that it sustained a loss of business… because it was not permitted to use its property as it would otherwise have done.
New Jersey Supreme Court statement
This ruling aligns with decisions in various state and federal courts nationwide, which denied insurance claims related to business interruptions during the COVID-19 pandemic. Similar cases involved movie theaters in California, a real estate firm in Los Angeles, hotels in Pennsylvania, and a law firm in New Jersey.
Atlantic City Has Largely Moved On from the Pandemic
Despite Ocean Casino Resort’s claims, the high-profile venue has mostly recovered from the pandemic and is enjoying an impressive resurgence. November 2023’s financial results revealed that the casino posted $48.1 million in total gaming revenue in October, up 52.6% compared to the same month in 2022.
Even without the insurance funds, Ocean Casino Resort is well-positioned to capitalize on gambling’s growing popularity in the USA. The region has achieved an impressive balance between land-based and online operators, allowing physical venues to focus on bettors seeking a more comprehensive leisure experience, particularly the VIP crowd.
The New Jersey Supreme Court’s decision can benefit the sector in the long term, reaffirming US regulators’ overall stance on this matter. It is high time operators moved on from the pandemic to focus on the future, seizing new opportunities and focusing on providing customers with the best possible experience.