Analyst: ‘Vast majority’ of Nevada gamers excluded from new SBA program
The Nevada Independent
EDITOR’S NOTE: This story has been updated, including with a new headline, from the original version (published at 12:55 p.m. Tuesday) to include comments from Sen. Catherine Cortez Masto and comments from Applied Analytics’ Jeremy Aguero and UNLV’s Stephen Miller.
Casinos with fewer than 500 employees can participate in the Small Business Administration’s Paycheck Protection Program if their gaming revenue last year was less than $1 million and comprised less than half of business revenue, under new SBA guidance.
But the new parameters are unlikely to help many of Nevada’s small casinos.
“The way the guidance is structured, the number of Nevada casino-gaming operators that will be able to participate in the Paycheck Protection Program would appear to approach zero,” said Jeremy Aguero, a principal Las Vegas-based Applied Analytics. “There may be a few that qualify, but the criteria are such that the vast majority will remain excluded.”
Stephen Miller, who teaches economics at UNLV, said he was also doubtful that the change would make much difference noting that it was only a 17 percentage point change from the 33 percent limit on gaming revenue specified in the initial guidance.
“I think the administration was trying to give something, but I don’t think they gave a lot,” Miller said.
Sen. Catherine Cortez Masto, in a release, said the new guidance “does nothing to help Nevada gaming operators who need access to these critical programs – just as much as any other small business.”
SBA Administrator Jovita Carranza and Treasury Secretary Steven Mnuchin believe “this test appropriately balances the longstanding policy reasons for limiting lending to businesses primarily and substantially engaged in gaming activity with the policy aim of making the PPP Loan available to a broad segment of U.S. businesses and their employees,” the SBA said.
First reported by the Las Vegas Review Journal, Mnuchin was asked about the issue at a press conference Monday when he balked at the use of the term “small casino.”
“No — not small casinos, but there are such things as small taverns and restaurants that have literally, you know, small gaming things,” the treasury secretary said. “And we are coming out with some additional guidance on that. But I want to be clear: It’s not small casinos.”
His characterization was contradicted by Rep. Mark Amodei, who appeared on The Dan Mason Show Monday.
“It’s mom and pop stuff; people with slot machines in the bar,” Amodei said. “Heck, I’m even pretty sure some of the grocery stores, you know, have those areas outside.”
When the SBA launched the PPP earlier this month to help businesses make payroll during coronavirus shutdowns, it relied on long-established SBA policies to write the rules for the loan program, including using previous guidelines that excluded businesses that make more than one-third of revenue from gambling.
“If you’re in the gaming business, and you’re not deriving a heck of a lot more than a third of your revenue from having those things around, then you’re not doing too good in the gaming business,” Amodei said.
“While I have been told that the administration will continue to work on this issue, the treasury secretary’s comments today are not indicative of one who prefers not to discriminate,” Amodei said, of Mnuchin’s dismissal of small casinos.
The language affected 42 other states. All of the members of the state’s delegation have been pushing for an easing of the rule.
The program provides $350 billion in loans to small businesses, defined as those with fewer than 500 employees. Those loans would later be forgiven if the funds are used to keep current workforces in place or to pay mortgage interest, rent and utilities. The roughly week-old program’s popularity is such that it could run out of funds as soon as this week. Senate Republicans and the White House are pushing to add another $250 billion. But House and Senate Democrats want more funds for other parts of the economy, including $150 billion for states and more money for hospitals. Negotiations are ongoing.
The American Gaming Association welcomed the new guidance, but added that the group would continue to guard against “discriminatory policies that have, to date, restricted small gaming companies from accessing critical loan support.”
“As Congress seeks to put additional resources behind the PPP, we look forward to working with them to make it clear that ‘we are all in this together’ by rejecting the SBA’s dangerous view that gaming employees don’t deserve assistance during this unprecedented crisis,” the AGA said.
Heather Ashbridge, who started with Nevada State Development Corporation in 2008, previously served in several roles with the organization, including assistant vice president and loan officer. She is based in NSDC’s Reno office.