Gaming

The rise of online gambling and more widespread legality exposes the gaming industry to broader opportunities — and new risks. Marsh offers gaming companies a safety net through innovative insurance offerings and risk management solutions.

No longer confined to specific markets like Las Vegas, Atlantic City, Monte Carlo, and Macau, casino gaming has expanded to global proportions in just a few decades. The spread of easily accessible online casinos has further galvanized the industry's growth into a lucrative juggernaut. Governments all over the world have become more open to legal, regulated gambling as a source of tax revenue. With casino games and sports betting alike increasingly coming out of the back room and into the mainstream, it's no surprise the global gaming industry reached a market value of $227 billion in June 2020.

But the sector was not spared by the enormous impact of the COVID-19 pandemic, which led to the temporary or permanent closures of numerous brick-and-mortar casinos and sent industry leaders into an uncertain 2021. Moreover, the new frontiers of online casino gaming bring with them risks of another kind — the looming threats of data breaches, ransomware attacks, and cybertheft.

Marsh's risk management specialists understand that the ebb and flow of business can be just as unpredictable as any roulette wheel. We can help you tailor a gaming insurance and risk management solution for your precise needs and help you face the unexpected head-on.

The state of Nevada is, effectively, the epicenter of the US commercial gambling industry and its biggest cultural outpost. In 2019, its casinos drew more than $12 billion in gross revenue — almost four times that of the second- and third-most profitable states (New Jersey and New York, respectively). Across the country as a whole, Native American casinos account for almost half of all gaming revenue — 45% in 2018 — and serve as a valuable source of municipal funding for the tribal governments and people they represent.

Sports betting and daily fantasy sports, especially in their online and mobile formats, are on track to become extremely important to the sector in years to come. The pastime is legal in more than half of US states (though not yet operational in some cases) and under consideration in about a dozen others.

A combination of broadening legality, greater presence in popular culture, and insulation from some risks faced by conventional casino gaming could help sports betting fuel industry growth for decades. However, the online books come with hazards of their own — including data breaches and other cyber threats — and in US regions where cultural or legal opposition to gambling does exist, it is particularly fierce.

FAQs

Because casino gaming has come to encompass so many different lines of business (land, online, riverboat, racetrack, sportsbooks, and more), one-size-fits-all property and liability coverage — or even a specific "gaming insurance" policy — often won't suffice.

Your insurance should be commensurate with the risks you're most likely to face. For example, a riverboat establishment should have protection for hull and passengers alike, and significant liability leeway for damages and injuries if the boat has a liquor license. By contrast, it would behoove an online casino to insure its operation against the risk of cyberattacks and other computer-based fraud.

The degree to which online hazards matter to casinos depends on their level of involvement in web-based gaming — which, these days, is considerable for the vast majority of operators.

Data breaches that expose customers' personally identifiable information and the crippling danger of ransomware are some of the biggest risks casinos face. Gaming businesses must also consider the uncertainties presented by new frontiers like cryptocurrency: Despite growing interest in Bitcoin and other crypto varieties as drivers of gaming, their novelty, volatility, and unregulated nature represent risks just as big as their profit potential.

Casinos operate at the pleasure of lawmakers in their relevant jurisdictions, making strict regulatory compliance an absolute must. Failures in this regard can lead to fines and other penalties, including loss of licensure. As such, it is critical that compliance issues be factored into risk management.

Even in a world of more regulated gambling, gaming enterprises remain susceptible to hazards like fraud, embezzlement, and threats to customer safety. Last, but not least, all casinos – earthbound or online – should have disaster recovery contingencies against worst-case scenarios ranging from fires and floods to catastrophic server failures.

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Joe Addison

US Entertainment, Hospitality & Gaming Practice Leader