Casinos across Colorado and the rest of the country now have a financial lifeline.
Casinos with fewer than 500 employees are now eligible to tap into a second round of federal funding. The Paycheck Protection Program (PPP) has $310 billion in small business loans available to eligible businesses.
Cap on gambling earnings for PPP eligibility now completely gone
It’s a reversal, of course, from just weeks ago when struggling casinos were unable to apply for the first round of loans because of a long-standing rule. It barred businesses reporting more than one-third of their revenue from legal gambling from receiving Small Business Administration loans.
The Treasury Department increased the cap on gambling earnings just two weeks ago.
After a flurry of intense lobbying by the gaming industry, President Donald Trump’s administration announced last Friday it was removing the cap entirely. That means legal gaming revenues no longer disqualify casinos from PPP eligibility.
The Washington Post was among the first to break the news on casinos being eligible for small business loans.
“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 said last Friday in a written statement.
The Treasury Department noted businesses that received illegal gaming revenue are still ineligible for PPP funds.
The American Gaming Association praised the new regulatory guidelines.
“I’m grateful to President Trump and his administration for recognizing that commercial and tribal gaming industry employees deserve the same support available to other small businesses, and for the significant, sustained efforts of members of Congress to amplify the need for changes to the guidelines to get small gaming operators and their employees through this challenging time,” American Gaming Association President and CEO Bill Miller said in a statement.
Colorado casinos have already lost $81 million in revenue
The updated regulations should bring some relief for Colorado casinos that have reported at least $81 million in losses since shuttering on March 16. Countless casino workers have been furloughed in the gaming towns of Black Hawk, Central City, and Cripple Creek as a result of the ongoing COVID-19 pandemic.
The state’s “stay at home” order to fight coronavirus shifted on April 26 to a “safer at home” policy. The newer version came with looser restrictions in some areas. But casinos remain closed, even with the May 1 launch of legal sports gaming just days away.
Gov. Jared Polis indicated Monday that the state hasn’t yet cracked the code for how to open casinos, nightclubs, and bars safely. He noted these facilities pose unique challenges due to their “inherently social” nature.
In the meantime, casinos with fewer than 500 employees are now eligible to apply for PPP loans. Native American tribes that own casinos are also eligible for stimulus aid.
The city of Black Hawk also waived gambling fees for its casinos to try and provide some additional financial relief.
CO casinos employ almost 9,000 people
The state’s gaming industry employed 8,956 people in 2018, according to the latest estimates from the Colorado Department of Revenue.
The employment numbers break down by community as follows:
The PPP provides small businesses with funds to pay up to eight weeks of payroll costs, including benefits, according to the Treasury Department.
Loan recipients can also use the money to pay interest on mortgages, rent, and utilities.
Recipients can defer loan payments for six months. If the employer maintains or quickly rehires employees, maintaining salary levels, the loans are completely forgiven. However, at least three-quarters of the forgiven amount must be used for payroll.