A brief ray of hope came when the President signed the Coronavirus Aid, Relief and Economic Security (CARES) Act, providing $2.2 trillion in aid, including $349 billion in forgivable loans to small businesses to cover payroll and expenses during the COVID-19 crisis.
But that sense of relief was very short-lived for small casinos that employ less than 500 people: the Small Business Administration (SBA) loans preclude businesses that derive more than one-third of their gross annual revenue from legal gambling activities.
The National Indian Gaming Association (NIGA) is protesting the clause in the SBA’s interim guidelines that prevent small casinos and their employees from receiving support. NIGA has also lambasted the SBA’s oversight of Tribal Government Gaming in the emergency relief available through the Paycheck Protection Program (PPP).
“The National Indian Gaming Association condemns the SBA for its blatant disregard of the Congressional language in the Covid Relief Act. The SBA’s guidance fails to recognize the importance of the survival of Tribal Government Gaming for its citizens and non-tribal neighboring residents. We are working expeditiously to respond and urge the SBA to remove these restrictions to Tribal Government Gaming operations and will continue to update our Member Tribes on the status of our outreach,” NIGA responded.
The American Gaming Association (AGA) is also advancing the gaming industry’s case, urging SBA Administrator Jovita Carranza and the U.S. Department of Treasury to rectify the terms and extend the much-needed financial relief to casinos.
“In SBA’s efforts to quickly issue guidance on the PPP, they relied on antiquated, discriminatory regulations that ignore today’s economic reality and the congressional intent behind the CARES Act, which states that any business concern shall be eligible to receive an SBA loan if they meet specific qualifications regarding their number of employees,” the AGA said in a statement.
“Unless amended, these initial guidelines will irreparably harm one-third of the U.S. casino industry and the hundreds of thousands of Americans that rely on gaming businesses for their livelihood,” the AGA stated.
The AGA stressed that the inclusion of gaming businesses in the PPP is critical to help ensure employees can remain connected to their employers, stay off of unemployment, and quickly return to their jobs when the pandemic subsides.
The PPP loans enable certain businesses with 500 or fewer employees to obtain loans of up to $10 million. Part or all of the loan may be forgivable, dependent on the loan’s use. The loans can be applied to payroll, group health benefit insurance premiums, rent payment, interest payments on loans, and utilities during the “covered period” between February 15, 2020, and June 30, 2020.
As NIGA and the AGA push for amended eligibility rules for PPP loans to include gaming establishments, the clock is ticking. PPP relief is first-come, first-served, and more than 17,500 loans totaling $5.4 billion were approved on April 3, when the SBA began accepting applications. President Trump has stated he will request more money from Congress for the Paycheck Protection Program if funds run out.
The financial implications of PPP exclusion for Indian Country would be devastating, given the Tribal gaming industry employs 700,000-plus people, many of them at small casinos. A great majority of those jobs are at non-gaming businesses affiliated with the casino, such as restaurants and entertainment venues — all shuttered amid the COVID-19 pandemic. Those Tribal casinos also support local small businesses and jobs in construction, manufacturing, retail, wholesale and more.
Indian gaming generated $37 billion in annual revenue in 2017. Revenue from Tribal gaming supports fundamental programs and services for Tribal members, and for many Tribes, gaming is their primary economic generator and financial backbone. Meanwhile, Tribal revenue share payments bolster state programs and services such as education and infrastructure.