Small US casinos have finally been deemed eligible to participate in the federal government’s pandemic relief program following heavy campaigning by the industry’s main lobby group.
On Friday, the Small Business Administration (SBA) issued yet another revision to its Paycheck Protection Program (PPP), the COVID-19 relief effort that offers small businesses loans of up to $10m, which can be written off if at least three-quarters of the lent sum goes toward paying staff that would otherwise get the sack.
The SBA’s pre-pandemic rules forbid coming to the financial aid of any company that derives “more than one-third of gross annual revenue from legal gambling activities.” The SBA amended that policy last week to make companies eligible if gaming provided up to 50% of annual revenue but capped that revenue at $1m, effectively excluding all businesses except bars that host a few slot machines.
On Friday, the SBA announced that a business was no longer “rendered ineligible due to its receipt of legal gaming revenues.” The SBA said that, after consulting with Treasury Secretary Steve Mnuchin — who said last week that the PPP explicitly excluded small casinos — it believes this new approach is “more consistent with the policy aim of making PPP loans available to a broad segment of U.S. businesses.”
Bill Miller, CEO of the American Gaming Association (AGA), was quick to heap praise on President Trump and members of Congress for correcting the SBA’s “antiquated policy” and for “recognizing that commercial and tribal gaming industry employees deserve the same support available to other small businesses.”
America’s nearly 1,000 commercial and tribal casinos have been shut since mid-March, with an estimated 650k staff left without steady work or pay. Some companies have been more generous than some others in looking after furloughed staff, but even the generous ones may not have the wherewithal to keep staff fed should the casinos not reopen soon.
Even when that reopen signal is given, analysts expect the recovery to be slow. Moody’s issued a note on Thursday suggesting that – given the expected restrictions on gaming operations – it would take a year for the US casino sector to get back to a level where their earnings were just 30% of their former glories, with a full recovery not likely for over 18 months.
Those are sobering estimates for tribal gaming operators, on whose revenue entire communities often rely. Compounding matters is that Native Americans have been disproportionately represented in COVID-19 infection counts, just as they suffer higher rates of other serious illnesses.
