But following lobbying from the casino industry, rules issued by President Trump’s administration Friday state that no business is disqualified from receiving PPP loans because of gambling revenue.
That follows a softening of the government’s stance two weeks ago, when the Treasury Department raised the cap on gambling earnings from one-third of a company’s revenue to one-half. The new rule removes the cap altogether.
“On further consideration, the Administrator, in consultation with the Secretary, believes this approach is more consistent with the policy aim of making PPP loans available to a broad segment of U.S. businesses,” the Treasury Department wrote in the rule issued Friday.
The industry group that has been pressing for the change, the American Gaming Association, applauded the decision, saying it makes “small gaming companies eligible for this critical program just as Congress has replenished its funding.” In an April 8 letter to Trump, the AGA had condemned the previous ban on casinos getting small-business funds as “antiquated policy,” writing that “individuals who are laid off will otherwise be pushed into unemployment assistance and Medicaid.”
Members of Congress representing Nevada from both parties have pressed the administration in recent weeks to make the change. The state’s senators, Democrats Catherine Cortez Masto and Jacky Rosen, and Gov. Steve Sisolak (D) celebrated the move.
“This is a great step forward for our gaming small businesses. I am proud that the Nevada delegation worked hard to secure this aid for our Silver State!” Sisolak tweeted.
Big-name Las Vegas casino operators such as Las Vegas Sands and Caesars aren’t eligible for PPP funds because their locations typically employ more than 500 people. But the American Gaming Association estimates more than 6,000 businesses in 30 states could qualify under the new rules.
Craig Holman of the advocacy group Public Citizen said gambling businesses should be a low priority as policymakers look to shore up certain industries with taxpayer-backed loans.
“Granted they provide some jobs, but it’s not what I would consider a socially significant industry. Casino owners have a lot of money in the first place,” Holman said.
Holman said Friday’s rule change is a function of the industry’s influence in Washington.
“What is very offensive about this is that the casinos have been pouring a lot of money into lobbying to try to get included in the various bailout programs. … Now it appears that lobbying effort has paid off,” Holman said.
Trump, a former casino owner himself, still owns a hotel with casino magnate Phil Ruffin, the Trump International Hotel Las Vegas. Although the hotel does not have a casino, Trump’s company operates the property and relies heavily on Las Vegas tourism for business.
Treasury Department and Small Business Administration officials did not respond to requests for comment.
Casinos were among the earliest and hardest-hit sectors in the economy, along with airlines, hotels and restaurants. For more than two weeks, all 989 commercial casino properties in the country have been closed, putting 652,000 employees out of work or on furlough, according to the American Gaming Association. More than 1 million other jobs, in transportation, restaurants and other fields, rely on the industry as well.
While ineligible for PPP funds, the big Las Vegas-based chains could qualify for aid under other portions of the stimulus package, although it is unclear so far how many of them have taken advantage. The chief executive for MGM Resorts — the top casino company in Las Vegas and operator of the Bellagio and MGM Grand — has said the company doesn’t plan to seek stimulus funds.
Economic data shows Las Vegas has been one of the metropolitan areas hit hardest by the shutdowns during the coronavirus pandemic, as the industry supports one-third of the jobs in Nevada. The industry also pays taxes equivalent to about 40 percent of the state’s general fund revenue, according to the Nevada Resort Association.
Las Vegas Mayor Carolyn Goodman issued a statement last week explaining “how perilous and unique our situation is if our hospitality industry doesn’t reopen soon.” She has been criticized for suggesting on CNN that the city could reopen early and act as a “control group” for the rest of the country as other jurisdictions consider reopening.
Native American tribes, which also own numerous casinos, have also been hit particularly hard by the pandemic. Casinos run by tribes are also eligible for stimulus funds.