Casino Industry: New Federal Guidelines For Industry Relief ‘Fall Woefully Short’

Some progress was had on the interim regulations for a program designed to help small business, including gaming firms, but it's not enough.
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The casino industry, like many others, is getting some assistance from the federal government under the dire economic situation stemming from COVID-19, but many gaming companies with 500 or fewer employees are still being left out in the cold.

The federal Small Business Administration on Tuesday released revised interim regulatory guidelines for the Paycheck Protection Program that will provide forgivable loans to “small” businesses.

The American Gaming Association asked President Donald Trump in a letter last week to intervene and look at “antiquated” provisions in the regulations that would bar companies generating a third or more of their revenue from legal gambling from receiving a share of the nearly $350 billion in PPP funds. The antiquated rules date back to the 1990s but weren’t updated for the PPP loans.

The revised rules state:

A business that is otherwise eligible for a PPP Loan is not rendered ineligible due to its receipt of legal gaming revenues if the existing standard in 13 CFR 120.110(g) is met or the following two conditions are satisfied: (a) the business’s legal gaming revenue (net of payouts but not other expenses) did not exceed $1 million in 2019; and (b) legal gaming revenue (net of payouts but not other expenses) comprised less than 50 percent of the business’s total revenue in 2019. Businesses that received illegal gaming revenue are categorically ineligible. The Administrator, in consultation with the Secretary, believes this test appropriately balances the longstanding policy reasons for limiting lending to businesses primarily and substantially engaged in gaming activity with the policy aim of making the PPP Loan available to a broad segment of U.S. businesses and their employees.

Not good enough

The PPP is designed to help small businesses retain their workforce by issuing up to $10 million in assistance. A forgivable loan of that size is a lifeline for many small gaming firms.

During a Monday White House press briefing on the public health crisis, Treasury Secretary Steve Mnuchin, a drafter of the CARES Act that created the PPP, indicated that there would be minor changes to the interim rules, but that the revisions would not cover all of what the casino industry is seeking. Mnuchin said bars and taverns that have minor gaming operations would be included, but he said the update wouldn’t apply to “small casinos.”

The SBA “today released revised regulatory guidelines that will allow additional small businesses that derive revenue from legal gaming to participate in the Paycheck Protection Program (PPP),” AGA CEO Bill Miller said in a statement released Tuesday afternoon.

“While these changes represent some progress,” he added, “they fall woefully short of fully addressing antiquated, discriminatory policies that have, to date, restricted small gaming companies from accessing critical loan support made available through the CARES Act. As a result of this half-measure, small gaming businesses that have closed to comply with government orders will continue to be denied access to this critical lifeline to support their employees.”

Next steps

Hundreds of thousands of jobs in gaming are at stake.

There’s currently a lot of debate on Capitol Hill about the future of the economy, including additional legislation to stimulate it. There could be additional funding to the PPP, according to the AGA. The PPP funds reportedly are quickly being divvied up. The interim regulations were released on April 2.

“As Congress seeks to put additional resources behind the PPP, we look forward to working with them to make it clear that ‘we are all in this together’ by rejecting the SBA’s dangerous view that gaming employees don’t deserve assistance during this unprecedented crisis,” the AGA said.

Additional legislation may make it possible to get relief to these small gaming companies.

Nearly 1,000 casinos across the country have shuttered due to COVID-19 health concerns.

Photo via Shutterstock.com

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