In a harshly worded statement released late last week, the American Gaming Association was critical of an interpretation of the act by the Small Business Administration. The SBA said the Paycheck Protection Program, which will reimburse businesses with less than 500 employees for payroll, rent and some other expenses, doesn’t apply to “gambling businesses” that derive more than one-third of gross annual revenue from legal gambling.
The AGA said it was “deeply concerned with the interim regulatory guidelines issued by the Small Business Administration, which preclude small gaming entities and their employees from receiving economic support under the newly-established Paycheck Protection Program (PPP).
“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.
“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.”
AGA President and CEO Bill Miller said the exclusion amounts to one-third of the gaming industry that will be unable to access benefits from the CARES Act.
While most American casinos have in excess of 500 employees and are not part of the SBA plan, the interpretation could hit the smaller casinos very hard, with no sophisticated finance experts to find other ways to ease their financial burdens.
The decision appears to only impact casinos, small gaming operations and route operators who are actively involved in gaming. Gaming manufacturers are not included, according to the Association of Gaming Equipment Manufacturers (AGEM), upon advisement from the AGA. Even reaching further back into history, AGEM cited a 1960 SBA decision that exempted manufacturers from the SBA ban on loans to gambling operations.
“Although SBA does not render financial assistance to small business enterprises engaged in gambling activities, the limitation on such loans is interpreted as not intended to cover manufacturers or lessors of instruments or materials which may be used in such activities.” The opinion involved a company that was producing keno tickets and requesting an SBA loan.
