Gaming & Hospitality Legal News = Volume 12,=20 Number 9: As Federal Aid for the Gaming Industry Lags in the US, Gaming=20 Properties Prepare for Eventual Re-Opening
DOWNLOAD PDF =- Gayn= or,=20 Jennifer J. . Ge= mignani,=20 Gregory R. Lowenhar-Fisher,=20 Kate C. Silve= r,=20 Jeffrey A. =20 =20
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Industry Alerts =
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Over the past several weeks, we have seen the gaming industry = scramble to=20 gain inclusion in relief under the hastily passed Coronavirus Aid, = Relief, and=20 Economic Security Act of 2020 (=E2=80=9CCARES=E2=80=9D), including the = Paycheck Protection=20 Program (=E2=80=9CPPP=E2=80=9D).
CARES was designed to assist businesses and furloughed employees in = their=20 efforts to tread water until the pandemic crisis has passed. Much = has=20 already been written about this welcome relief in the form of Small = Business=20 Administration (=E2=80=9CSBA=E2=80=9D) loans for businesses which = qualify as a =E2=80=9Csmall business=20 concern.=E2=80=9D
The Gaming Industry Gets Shut Out
As the gaming industry (both private and tribal) quickly learned, = most had=20 been shut out from these loan benefits because the law and Interim Rules = as=20 written exclude millions of gaming employees from the safety net = provided by=20 PPP.
Why was this business-salvaging program not available to the gaming=20 industry? That is a question currently being asked by the American = Gaming=20 Association (=E2=80=9CAGA=E2=80=9D), the Association of Gaming Machine = Manufacturers (=E2=80=9CAGEM=E2=80=9D),=20 the National Congress of American Indians and many other organizations, = tribal=20 authorities and individual gaming operators.
On April 8, 2020, Bill Miller, the President and CEO of the AGA, sent = a=20 letter to President Trump regarding this =E2=80=9Cunintentional = exclusion=E2=80=9D in which he=20 requested assistance to address the Interim Final Rules adopted by the = SBA on=20 April 2, 2020 (the "Interim Rules"). He stated, = =E2=80=9CSpecifically, these=20 interim rules rely on antiquated, discriminatory policy that renders = small=20 gaming entities ineligible to receive critical loan assistance designed = to help=20 small businesses pay their employees.=E2=80=9D
The rules referenced were found in 13 CFR Section 120.110 which = describes the=20 businesses eligible for PPP and specifically excluded those = =E2=80=9Cderiving more than=20 one-third of gross annual revenue from legal gaming = activities.=E2=80=9D =20 This provision is contrary to Section 1102 of the CARES Act which added = a new=20 section 7a to the Small Business Act that allows any small business = concern to=20 be eligible for PPP loans so long as size or monetary requirements (not = more=20 than 500 employees or maximum tangible net worth less than $15 million = and=20 average annual net income (after federal income taxes), of not more than = $5=20 million, calculated using the two years preceding the application) are = met.
Treasury Department Clarification Offers Little=20 Help
As of the date of this release, the Treasury Department and SBA have = offered=20 a =E2=80=9Cclarification=E2=80=9D for businesses that receive revenue = from legal gaming that=20 wish to be considered for a PPP loan:
A business that is otherwise eligible for a PPP = loan is=20 not rendered ineligible due to its receipt of legal gaming revenues if = the=20 existing standard in 13 CFR 120.110(g) is met or the following two = conditions=20 are satisfied: (a) the business=E2=80=99s legal gaming revenue (net of = payouts but not=20 other expenses) did not exceed $1 million in 2019; and (b) legal gaming = revenue=20 (net of payouts but not other expenses) comprised less than 50 percent = of the=20 business=E2=80=99s total revenue in 2019.
This clarification of the Interim Rules did little to assist small = casino=20 operators, including most tribal operations, whose revenue is derived = primarily=20 from gaming. The political and emotional battle lines are drawn = for the=20 inclusion of small casinos in the PPP and while a favorable outcome is = still=20 possible, a disappointed Bill Miller stated =E2=80=9CDespite promising = conversations=20 with the administration over the last two weeks, this updated guidance = falls=20 woefully short of fully addressing antiquated, discriminatory policies = that=20 have, to date, restricted small gaming companies from accessing critical = loan=20 support made available through the CARES Act.=E2=80=9D His hope = would be that=20 gaming can make its case in a subsequent funding.
Although the funds for the initial tranche of SBA funding were = quickly=20 exhausted, hope is on the horizon. News sources have reported that an = agreement=20 on a new $470 billion federal stimulus package, which would include $310 = billion=20 more for the PPP, is imminent.
Other Interim Options for Gaming = Companies
In the interim, The Pandemic Unemployment Assistance = (=E2=80=9CPUA=E2=80=9D) law, referenced=20 in Section 2102 of CARES, generally allows states that enter into an = agreement=20 with the Secretary of Labor (the =E2=80=9CSecretary=E2=80=9D) to pay up = to 39 weeks of benefits=20 to individuals who are not eligible to receive or who have exhausted = their=20 regular unemployment compensation benefits and can meet the eligibility=20 requirements described below. The costs of this new federal = benefit=20 program are 100% federally funded, but require the State to enter into = an=20 agreement with the Secretary in order to receive the funding for this=20 program.
In Section 2102 of CARES (potentially applicable to the gaming = industry=20 employees, including part-time workers), an individual who is not = eligible for=20 regular unemployment compensation or extended benefits under State or = Federal=20 pandemic emergency unemployment compensation under Section 2107 of = CARES,=20 including a person who has exhausted all rights to regular unemployment = or=20 extended benefits, may be eligible for PUA relief. Section 2107 is = emergency funding which expands unemployment compensation benefits to = provide an=20 additional 13 weeks of benefits if the individual remains unemployed = after 26=20 weeks at a weekly rate of $600 for that 13-week period).
In order to be eligible for PUA, the employee must provide a = certification=20 under oath that he or she is otherwise available to work, but they are=20 unemployed because they have contracted the virus, a family member has=20 contracted the virus and they have voluntarily self-quarantined, they = are caring=20 for children who must remain at home because of school closures, or the=20 individual=E2=80=99s place of employment is closed as a direct result of = the COVID-19=20 public health emergency. If an employee can demonstrate he or she = is=20 a =E2=80=9Ccovered individual=E2=80=9D under PUA, the employee = would be eligible for=20 assistance for up to 39 weeks due to unemployment, partial = unemployment or=20 inability to work caused by COVID-19 beginning on or after January 27, = 2020 and=20 ending on or before December 31, 2020.
In general, the weekly benefit shall be the amount authorized under = the=20 unemployment compensation laws of the State where the covered individual = was=20 employed (except that the amount may not be less than the minimum weekly = benefit=20 amount described in section 625.6 of title 20, Code of Federal = Regulations=20 https://www.govinfo.gov/content/pkg/CFR-2012-title20-vol3/pdf/CFR-2012-ti= tle20-vol3-sec625-6.pdf=20 ).
The Secretary shall provide these supplemental funds to the State for = distribution to the affected employees. Employers of affected = employees=20 should advise the furloughed or terminated employees to first file for = regular=20 unemployment benefits and, if such benefits are denied or have been = exhausted,=20 the employee should seek coverage under PUA. Under the law, the = State is=20 required to provide the employee a prompt determination and notification = of=20 appeal processes in the event PUA coverage is not granted. The PUA = can=20 also apply to self-employed persons provided they can meet certain = eligibility=20 certification standards.
Individuals who meet the following criteria are not eligible for = PUA:
- Individuals who have the ability to telework with pay. When = addressing=20 issues about the availability of paid telework, the State must = determine=20 whether the claimant has been offered the option of continuing to work = for pay=20 by teleworking. If so, and claimants were offered to continue to work = the same=20 number of hours, claimants are not eligible for PUA.
- Individuals receiving paid sick leave or other paid leave = benefits. If=20 claimants receive such leave for their customary work hours, they are = not=20 eligible for PUA. The State must treat any paid sick leave or paid = leave=20 received by a claimant in accordance with the income restrictions set = out in=20 PUA at 20 C.F.R. 625.13.
Finally, there are several additional programs that were a part of = CARES=20 which the authors can discuss with your individual business. They = include=20 Economic Injury Disaster Loans (=E2=80=9CEIDL=E2=80=9D) which are also = available through the SBA=20 through December 31, 2020. These loans can provide paid sick leave = to=20 employees unable to work due to the effect of COVID-19 and/or to meet = increased=20 costs to obtain materials that would be unavailable through traditional = supply=20 chains and pay obligations that cannot be met due to revenue = losses. For=20 those requiring immediate relief, an emergency advance of up to $10,000 = may be=20 available.
Looking Towards the Re-Opening of Gaming=20 Properties
As the hard-hit gaming industry burns through their reserves and = gaming=20 employees continue to face workforce reductions and furloughs, all eyes = are=20 looking worriedly towards the future. Reports suggest that the impact of = COVID-19 will continue to be felt for many months to come. Given this = reality,=20 even after properties are allowed to re-open, the gaming industry as we = know it=20 will never be the same.
Indeed, in addition to the Nevada Gaming Control Board and Gaming = Commission,=20 Nevada gaming properties are paying increased attention to a regulatory = body=20 that will have a large say in what taverns and casinos will look like = when they=20 re-open- Nevada OSHA. Members of the Gaming Control Board have provided = that the=20 Board will be looking to OSHA for guidance on workplace rules for when = casino=20 operations resume in Nevada.
It is expected that the Board rules regarding re-opening procedures = will be=20 published soon, and it is expected that, much like the closing guidance=20 published by the Board, the published guidance will in large part look = similar=20 to prior memos regarding post remodeling closures, with the inclusion of = or=20 reference to OSHA-directed requirements for social distancing and = sanitization=20 at gaming properties.
A review of the Nevada OSHA protocols that have been issued for = essential=20 businesses that are continuing to operate during the pandemic provides = some=20 guidance on what those OSHA requirements may look like. For example, the = current=20 guidelines include that essential business shall:
- Establish effective social distancing protocols, which ensure that = staff=20 maintain a 6 foot personal separation from other staff during = meetings,=20 discussions, or other job tasks.
- Prohibit gatherings of 10 or more people.
- Promote frequent and thorough hand washing, including providing = workers,=20 customers, and worksite visitors with a place to wash their hands. If = soap and=20 running water are not immediately available, provide alcohol-based = hand rubs=20 containing at least 60% alcohol.
- Provide face masks to service runners who deliver ordered = materials to=20 curbside pick-up locations, attend to drive through windows, or any = other=20 immediately exposing tasks.
- Maintain regular housekeeping practices, including routine = cleaning and=20 disinfecting of surfaces and equipment with Environmental Protection=20 Agency-approved cleaning chemicals from List N or that have label = claims=20 against the coronavirus.
- Provide sanitation and cleaning supplies for addressing common = surfaces in=20 multiple user mobile equipment and multiple user tooling. This = guideline is=20 recommended based on the specifics of a business=E2=80=99s services = and procedures.=20
- Maintain 6 foot separation protocols for labor transportation = services,=20 such as buses, vans, etc.
- Conduct daily surveys of changes to staff/labor health conditions. = The=20 Nevada OSHA is emphasizing the need for business leadership to be = working with=20 and aware of the health and well-being of its staff.
- Ensure that any identified first responders in the labor force are = provided and use the needed Personal Protective Equipment (PPE) and = equipment=20 for protection from communicable or infections disease.
- Provide access to potable and sanitary water
Although these guidelines apply to businesses that are open during = the height=20 of the pandemic and will certainly be scaled back for re-opening after = the virus=20 has run past its peak, they offer a look into the sorts of practices = that will=20 be required when gaming properties come back online. This is especially = true=20 when these are paired with the GCB Restrictions on Operations during = COVID-19=20 Outbreak, which were issued on March 16, 2020, just prior to the total = closure=20 of the state=E2=80=99s gaming properties. These restrictions included = that:
- There may be no more than three chairs at each table game.
- Each gaming machine must be cleaned and sanitized at least once = every two=20 hours.
- Patrons may not serve themselves from buffets that remain open. = Similarly,=20 employees may not serve themselves in employee dining areas.
- The gaming floor and other public areas of a licensee=E2=80=99s = property must=20 operate under the latest social distancing guidance from = Nevada=E2=80=99s medical=20 advisory team.
It is safe to say that the world-famous Las Vegas buffets and crowded = casino=20 floors will not be the same, at least not anytime soon. In the meantime, = gaming=20 properties are working hard to prepare for the new normal and to ensure = they can=20 get up and running as quickly as possible.
For further information, attorneys at Dickinson Wright can=20 assist.
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