One of the many nuances among the language of the Coronavirus restrictions is defining what is and what is not an essential business or service within the US. The survival for many businesses future may depend on loans provided by the Small Business Association (SBA) and new laws written or standing providing for their needs. Evidently, no matter what the catastrophe, the federal government doesn't believe small casino operations fall under that definition.
Basically speaking, the premise is for all grocery stores, restaurants (take-out & delivery), fuel, hospital and most medical-related businesses to operate. However, even seeing your primary care physician or dentist is unlikely during our current phase. There is a gray area for certain businesses to fall within legal or sometimes illegal guidelines allowing select businesses to operate during the Coronavirus crisis.
Therefore, how could gambling in any way be considered "essential" in the current or upcoming discussion involving the economy and lives involving thousands of Americans. Like any good debate, the answers are not so overwhelming obvious as you might believe, one way or the other.
The Current Temperature
Right now, only horse racing provides any live feed of wagering action for a starved consumer base. All land-based U.S. casinos remain closed to the public. Daily horse racing network TVG has teamed up with the NBC Sports Channel to provide coverage on the weekends for feature races from a very limited number of racetracks including Gulfstream Park, Tampa Bay Downs and Oaklawn Park. Betting is conducted online daily, including availability from the list of top online sportsbooks.
Though there isn't any live audience at the tracks, the concept itself has been controversial due to the realistic idea that jockeys and all other racing-related personnel could be exposed to the virus. From a business perspective, the racing industry claims the purses gained by running helps augment the money necessary to care for the horses that must be fed daily, exercised, trained, etc. It's as if the horses themselves are human. Akin to paying people to necessarily feed their families. And ironically, that's a great indicator of why the business of gambling is essential. It helps keep thousands of people in their jobs to stay alive.
The interesting and reality part of the circumstances is that the Coronavirus period will contribute to the already huge declining audience showing up at racetracks. Without online gambling (simulcasting), horse racing is finished. There is no argument now that racetracks cannot survive without it, depending on the racino concept for their existence. Except for specific days like the Kentucky Derby or Preakness or the traditional Saratoga meeting, a live onsite horse racing audience is dead. Our new "social distancing" may have provided the final bell.
Opening the Casinos Again
Like many other business sectors, the traditional casino industry desperately awaits the day the President and all U.S. political leaders signal the green light toward opening their doors. Thousands of people have been instantly put out of work with no clear definition when or IF they will be welcomed back.
The major problem may be size. It is a misnomer to believe all casinos are run by giant public corporations. We commonly think MGM, Eldorado/Caesars, Penn National Gaming, etc. when envisioning the casino industry. But hundreds of casinos, especially in California and Nevada are categorized as small business operations. There lies the current dilemma as these independent casino operations will now be dependent upon the SBA for their sheer survival.
** Under current SBA guidelines, casino operations are not considered either essential or qualified for funding. This means they don't qualify for loans granted to support most other traditional American businesses.
U.S. citizens have pinpointed a few key benchmarks under the $3.2 trillion CARES Act, signed on March 26th. They include a one-time relief check, additional unemployment benefits and significant aid for small businesses available through the SBA. Under the CARES Act, small business is entitled to loans of up to $10M.
The state of California, which has included dozens of small card room casino operations for many, many years, may be the hardest hit by COVID-19. Los Angeles-area card casinos and cities that rely on the revenues they generate are appealing for state and federal assistance for help.
The city says it will be forced to offset the known losses of more than $1.5 million in the current fiscal year through reserve funds, layoffs and the reduction or elimination of youth and senior programs, police services, transportation options, nonprofit partnerships and infrastructure improvements. Beyond opinion there, anyone could see that's a bad accident waiting to happen. In an April 9 letter to California congressional leaders, the California Gaming Association called the situation dire.
Most of the casinos have fewer than 500 employees and although it appears they would qualify for the emergency Paycheck Protection Program (PPP) funds, businesses that get 33% or more of their revenue from legal gaming operations can't access the relief loans.
"Without the help of PPP funding, California’s gaming operators, all of which voluntarily ceased operations in mid-March, will be forced to permanently lay off employees and some may not be able to reopen," association President Kyle Kirkland wrote.
In all, California's situation is a microcosm of many states with similar problems. Unless the federal government makes amendments to the SBA's guidelines, thousands of people attached to these smaller casino operations will also be unjustly affected.
The AGA's Greatest Challenge and Test
Since these casino workers have no true union to really help and defend them, perhaps the AGA (American Gaming Association) is now their best hope and resource to convince President Trump and governing authorities to amend SBA guidelines.
Late last week AGA President Bill Miller wrote a letter to President Trump regarding the Paycheck Protection Program's Interim Final Rules released by the SBA. Miller discussed his concern with the SBA's interim regulatory guidelines due to it seemingly denying small gaming entities and their employees the ability to receive economic support under the newly-established PPP.
The letter read: "The American Gaming Association appreciates your leadership during this extraordinarily difficult time for our nation. The gaming industry is among the sectors most severely impacted by the COVID-19 outbreak, in large part, due to mandated closure of facilities, which has jeopardized the livelihoods of the 1.8 million Americans whose jobs we support across 43 states.
As you and your Administration continue to respond to the health, safety, and economic needs of the American people, I respectfully request your immediate intervention to address a significant problem with the Paycheck Protection Program’s (PPP) Interim Final Rules released by the Small Business Administration (SBA) on April 2, 2020.
Specifically, these interim rules rely on antiquated, discriminatory policy that renders small gaming entities ineligible to receive critical loan assistance designed to help small businesses pay their employees.”
Paraphrasing the rest of the letter it went to theoretically saying that "size doesn't matter". And discriminating against these specific smaller companies is improper and the type of service they are providing shouldn't be in question either as it is perfectly legal within the same tax guidelines as any other US business. In fact, the gaming industry pays among the highest taxes of any industry in the country.
The AGA received government feedback on Tuesday, but was far less than completely satisfied.
The SBA revised its guidelines covering small companies that service the casino industry, allowing certain businesses to apply for part of the $349 billion in forgivable PPP loans. However, the AGA noted that certain small gaming companies that closed to comply with government orders over the COVID-19 coronavirus pandemic, "will continue to be denied access to this critical lifeline to support their employees."
The major problem here is the obvious wording of "certain businesses" in that gray area that will not allow current small businesses to know where they stand in holding their future and the future of their employees at risk.
Nevada Representative Dina Titus, whose district includes the Vegas Strip, said the CARES Act was enacted to provide relief to all small businesses and their employees.
Titus went on to say, "The Trump Administration's attempt to arbitrarily pick winners and losers is detrimental to the recovery," Titus is, a Democrat who is co-chair of the Congressional Gaming Caucus. "It’s obvious that President Trump and Secretary Mnuchin do not understand the struggles of working people employed by smaller gaming establishments in Las Vegas and across the country. That’s why I will soon introduce legislation to ensure that none of these small businesses is prevented from receiving relief."
Gambling BUSINESS is Essential
The cruel irony here is a few states, including Florida and Arkansas, have decided to legislate that gambling on horses is perfectly legal. Not because they're truly animal advocates concerned about horses or even people, but they do care about the money that gambling brings in to offsetting the dangerous risks of Coronavirus for the people involved.
The result is, it keeps the economy flow going to pay people, pay purses, pay taxes, etc. The horses continue to race, eat, get their necessary exercise and stay healthy, as we haven't proven they are susceptible to COVID-19 as yet.
But currently, small casino businesses remain closed and are perilously in jeopardy of closing permanently without access to SBA loans. The money could be used to pay people, pay taxes and keep the economy going like any other food store, gas station or medical facility.
Given a choice, I think I'd rather be a healthy racehorse.
Glenn Greene covers the games from a betting angle every week exclusively at OSGA.com. For weekly betting insights, including previews and picks from Glenn, click here.