Alerts and Updates

Small Business Administration Updates Interim Regulatory Guidelines to Help Certain Gaming Companies

April 15, 2020

The revised guidelines still fall short of fully addressing the restrictions the SBA has placed on gaming companies.

On April 14, 2020, the Small Business Administration (SBA) issued revised interim regulatory guidelines for the Paycheck Protection Program (PPP). The revisions provide, in relevant part, that certain companies which derive revenues from legal gaming activities are eligible for PPP loans and are not automatically ineligible as previously thought pursuant to the interim regulatory guidelines released on April 2, 2020, and discussed in our previous Alert. Particularly, such companies are eligible for PPP loans so long as they can satisfy two conditions: (1) the legal gaming revenue (net of payouts but not other expenses) of the business did not exceed $1 million in 2019; and (2) the legal gaming revenue (net of payouts but not other expenses) comprised less than 50 percent of the business’ total revenue in 2019. The revised interim regulatory guidelines explain that the addition of these two conditions “appropriately balances the longstanding policy reasons for limited 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.”

Although the updated guidelines will come as a relief to many small businesses involved in the gaming industry, the revised guidelines still fall short of fully addressing the restrictions the SBA has placed on gaming companies. In addressing its continuing concerns, the American Gaming Association (AGA) stated that “[w]hile 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.” The AGA further declared it “will continue to strongly advocate for relief that supports the displaced gaming workforce and gaming companies of all sizes through this crisis.”

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