After heavy campaigning by casino industry interest groups, small casinos in the U.S. Are now eligible to receive business loans of up to $10 million for employees furloughed during COVID-19.
The catch? The loans can only be written off as long as three quarters of the money is used to pay staff during the mass layoffs.
Paycheck Protection Program
The Small Business Administration (SBA) revised its Paycheck Protection Program to include small casinos. Previously, the SBA rules prohibited financial aid for companies which derive more than one third of their gross annual revenue from gambling activities.
While large casinos can afford to be generous to staff during tough times, small casinos and bars that host slot machines were in serious peril – until now. With the new program in effect, small businesses can afford to keep afloat during the pandemic – and feed their staff.
The new PPP no longer restricts loans to small casinos, which represent a significant number. The SBA announced that a small business was no longer “rendered ineligible due to its receipt of legal gaming revenues.”
The U.S. has nearly 1,000 commercial and tribal casinos with 650,000 staff members out of work during the pandemic. And with the huge amount of revenue needed to keep casinos running, businesses and staff need all the help they can get, considering the meager unemployment benefits of most states.
A Slow Recovery
Experts predict that the U.S. casino sector will face a slow recovery after the pandemic passes. According to Moody’s, it would take a year for casinos to get back to earning 30% of their previous levels. And a full recovery would take more than 18 months.
Given that most casinos will not be reopening any time soon, the loans can go where they will be needed most: the millions of staff members who helped run the casino industry.
Tribal gaming operators are especially feeling the pain, as entire tribal communities rely on casino revenues to survive. Native American communities suffer high COVID-19 infection counts, just as they suffer higher rates of other illnesses.
The U.S. now has the largest numbers of coronavirus infections in the world, with more than 1 million confirmed cases and nearly 60,000 deaths. Those numbers need to drop significantly before casinos can even begin to think about reopening at full capacity.
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