Gaming business rule change doesn’t mollify Nevada lawmakers

WASHINGTON — Under pressure from Nevada officials and the American Gaming Association, the Trump administration on Tuesday changed rules to allow more small casinos and businesses involved in gaming to qualify for federal loans intended for businesses devastated by the coronavirus outbreak.

The new Small Business Administration rule would allow businesses with fewer than 500 employees that earn less than half their revenue from gaming to qualify for Paycheck Protection Program loans included in the $2 trillion CARES Act — an increase from a prior ceiling of one-third of revenue from gaming.

But Rep. Mark Amodei, the lone Republican in Nevada’s congressional delegation, wasn’t satisfied with the change. Denying small casinos and gaming operations access to the forgivable SBA loans goes against the will of Congress that all businesses, including gaming businesses, be treated equally.

The SBA rule squeezes small casino owners, Amodei said, but not big casinos eligible for “everything that’s available to other large businesses” under the CARES Act.

Amodei said the SBA’s decision to treat small casinos and gaming taverns differently is “tone deaf,” because it shows a lack of understanding of how such small businesses operate.

Picking winners and losers

Rep. Dina Titus, the Democratic dean of the Nevada delegation, echoed Amodei. “We passed the CARES Act with the intention of providing relief to small businesses and the millions of people whose jobs depend on them. The Trump administration’s attempt to arbitrarily pick winners and losers is detrimental to the recovery.”

Titus said she would “soon introduce legislation to ensure that none of these small businesses is prevented from receiving relief,” Titus added.

Amodei also thinks that the administration is running out of time to fix the problem, hence the need for a legislative fix.

The Review-Journal was able to ask President Donald Trump about the SBA rule last week during a coronavirus task force daily briefing. Trump said that he was unaware of the controversy, which had stirred protest from the Nevada delegation, but that he would look into the issue.

No help for some businesses

On Monday, Treasury Secretary Steven Mnuchin was asked about the issue. He scoffed at the notion that there are “small casinos,” although he recognized that “there are such things as small taverns and restaurants that have literally, you know, small gaming things. And we are coming out with some additional guidance on that.”

The new rule, which was posted Tuesday without an announcement, also caps gaming profits at $1 million in 2019 for applicants seeking Paycheck Protection Program loans under the CARES Act.

That didn’t sit well with a Nevada business owner.

“How did somebody just say $1 million?” asked Todd Nigro, president of Nigro Development, operator of the Distill chain that has 11 taverns in Nevada.

Under the new criteria of 50 percent revenue from gaming and $1 million ceiling, Nigro said, only one of his 11 taverns would qualify for a loan.

Nigro Development had laid off 300 people. His company was planning on rehiring those workers with CARES Act funds, until he learned that an old SBA rule would be used to disqualify gaming concerns.

“We were hopeful it would allow us to apply. The guidance came out and it essentially disqualified us,” Nigro said.

When Nigro heard there might be new SBA language, he hoped to reopen with fully staffed taverns “that would allow us to figure out where the market is,” he said. Instead he is looking at a “harsh reality.”

“While these changes represent some progress, they fall woefully short of fully addressing antiquated, discriminatory policies that have, to date, restricted small gaming companies from accessing critical loan support made available through the CARES Act,” AGA President Bill Miller said. “As a result of this half-measure, small gaming businesses that have closed to comply with government orders will continue to be denied access to this critical lifeline to support their employees.”

According to the association, casinos provide $52 billion in revenue and support 350,000 jobs in construction, manufacturing, retail and wholesaling firms.

In March, Gov. Steve Sisolak ordered the closure of the state’s casinos — an order that is expected to keep casinos shuttered through April 30, if not later.

By failing to act, Amodei told the Review-Journal, the Trump White House has handed an opportunity to House Speaker Nancy Pelosi and other Democrats to open the door on the next tranche of forgivable loans that could be used to keep casino workers on the payroll.

Amodei said the most bothersome thing about the rule is that it will cost jobs, but nobody is advocating for it. “Who the hell’s clapping for this?” he asked.

Contact Debra J. Saunders at dsaunders@reviewjournal.com or 202-662-7391. Follow @DebraJSaunders on Twitter.