Online gambling

Casino owner Pinnacle Entertainment has sued three insurance carriers over Hurricane Katrina damage at its former Casino Magic property in Biloxi, Miss.

Las Vegas-based Pinnacle claimed the three companies improperly blamed losses on flooding instead of a weather catastrophe of the kind specified in their policies.

Defendants were fully aware that hurricanes cause storm surge and flood," Pinnacle said in a 13-page lawsuit filed Tuesday in U.S. District Court in Las Vegas. It accuses the insurance carriers of fabricating arguments to limit or eliminate their responsibility to pay.

Officials at two of the companies - Allianz Global Risks U.S. Insurance Co. in Chicago and Arch Specialty Insurance Co. in New York - did not immediately respond to requests for comment. Dave Leonard, executive vice president at RSUI Indemnity Co. of Atlanta, declined comment.

Pinnacle claims breach of contract and fraud, and seeks damages of $346.5 million -- the difference it calculated between claims for flood rather than weather catastrophe.

Pinnacle also disputes the insurers' contentions that it was not covered for business interruption loss at the damaged floating casino, which remained closed after the Aug. 29 hurricane. Pinnacle agreed to sell the Casino Magic property to Las Vegas-based Harrah's Entertainment Inc. in May.

The lawsuit asks the court to declare Pinnacle's River City Casino & Hotel project in St. Louis County, Mo., a replacement for Casino Magic Biloxi, entitling Pinnacle to collect the full amount of its business interruption loss despite the pending sale.

Pinnacle shares closed Wednesday at $26.32, up $1.32 or 5.3 percent, on the New York Stock Exchange. Company stock has traded from $16.05 to $32.09 over the past year.

Pinnacle Entertainment Inc.: http://www.pnkinc.com
Allianz Global Risks U.S. Insurance Co.: http://www.aic-allianz.com/allianzuswebsite.nsf
Arch Specialty Insurance Co.: http://www.archinsurance.com
RSUI Indemnity Co. http://www.rsui.com