After a lengthy back and forth between the U.S. government and advocates representing small casinos, a deal has reached that will favor small casinos in the United States. They will now be covered by the federal government’s paycheck relief program due to the COVID-19 pandemic.
The Small Business Administration (SBA) issued what is expected to be the final revision to its Paycheck Protection Program (PPP) on April 24.
The PPP is a relief program that gives loans of up to $10 million to small businesses that can be written off if a minimum of 75% of the loan is allocated toward the salaries of employees who would otherwise have been let go.
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Before COVID-19, the SBA could not provide aid to any business where 33% or more of its gross annual revenue is derived from gambling. Early last week, the SBA revised their policy to include companies with 50% of annual revenues derived from gambling with a revenue ceiling of $1 million. The policy resulted in adding coverage to bars with slot machines, but no other gambling companies.
The SBA confirmed the repeal of these policies on April 24, after a consultation with Steve Mnuchin, the Treasury Secretary. According to the SBA, this will lead to the coverage of more companies that require help from the PPP.
The American Gaming Association (AGA) CEO Bill Miller expressed his approval of this development, thanking President Donald Trump and Congress members who helped convince the SBA to assist small gambling businesses hit hard by the COVID-19 pandemic.
Casino Industry Unlikely to Bounce Back Soon
The U.S. is home to over 1,000 tribal and commercial casinos which have been shut down since March. This has forced a 650,000-strong workforce facing intense financial pressures. While some casinos have taken the lead in providing for their furloughed employees during this trying time, it is expected that all casinos will eventually run out of money if they are not able to operate soon.
Market analysts state that re-opening casinos will not result in the immediate recovery of the industry. Risk analyst firm Moody’s said last week that the re-opening of U.S. casinos will likely be constrained by a series of rules designed to prevent the spread of COVID-19. Moody’s analysts believe that the casino industry will need at least 12 to 18 months to even come close to their former takes.
Tribal casinos are expected to take a bigger hit from this, as their revenue often supports the welfare of entire tribes. Native Americans have also been disproportionately hit by COVID-19 infections.
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