Small tribal casinos have begun to receive funds through the federal Paycheck Protection Program for coronavirus relief, boosting eventual reopening efforts but exposing the low wages of some of their workers, who got higher weekly pay from unemployment assistance than they do at their jobs.
Casinos from California to Michigan worked closely with small community banks to procure loans, tribal leaders, counsel and casino managers told Law360. Small businesses in the program can have their loans forgiven if they maintain payroll.
But even as tribes bring hundreds of casino workers back from furlough and ease off spending strained reserves, the experience has shone a spotlight on tipped workers who are making less now than they were on unemployment compensation.
"I look at it and say: We are showing that we simply don't pay people enough for the work that they do. As far as we're concerned, that's our fault as an employer," Bryan Newland, chair of the
Bay Mills Indian Community in Michigan's Upper Peninsula, told Law360.
Many of his 400 furloughed workers have benefited from an additional $600 a week in federal unemployment benefits, on top of state assistance, available through July 31.
Because tribes rely on casinos to fund their
government programs and services, Newland added, "we have to look at our tribe's long-term economic well-being, and we have to get ready to get our business back open."
To do that, the community is refurbishing the casino to fight the spread of the coronavirus.
"Everything from thermal scanners to automatic sinks and toilets. In some places we're looking at installing automatic doors," Newland said. "Without PPP, we would have had to call back the minimum amount of staff and given them five days to put this all together so we could afford it."
The $2 million PPP loan will also allow the tribe to continue to cover workers' health insurance costs without dipping deeper into reserves, according to Newland.
Bob Gravelle, director of gaming at the Bay Mills Resort & Casinos in Michigan, estimates that 60% of his returning co-workers have taken a pay cut compared to the upgraded unemployment benefits.
"My daughter, she's a waitress there, and she was making a lot more on unemployment," he said. "So it's tough, right? People are actually losing money going back to work. I understand it's not going to last forever, the extra $600 bonus, but still, frustrating for everybody."
The
Flandreau Santee Sioux Tribe of South Dakota, which furloughed 225 workers after closing its Royal River Casino on March 31, also said workers are facing a pay cut for returning to work compared to the enhanced unemployment benefits.
"Many employees will return to work and make less than when they were furloughed," said Seth Pearman, attorney general for the Flandreau tribe. "This creates potential tension between the employer and employee, and hopefully, future stimulus packages will consider aid to working employees and workers who are deemed essential."
The
Small Business Administration, which is operating the Paycheck Protection Pogram,
loosened long-standing restrictions on assisting gambling businesses in late April, just as President Donald Trump signed a new relief bill that injected $310 billion more into PPP. The first $350 billion was
exhausted in less than two weeks.
Tribal casinos told Law360 that, after
fighting for PPP eligibility, they had quick success working with small, local lenders.
In Central California, the
Big Sandy Rancheria of Western Mono Indians operates Mono Wind Casino, 40 miles northwest of Fresno. The casino and tribal businesses applied for a $924,460 loan on April 27 — the first day of eligibility — and received the full amount within 10 days.
Casino general manager Kerry Smith told Law360 that it helped to have a long-standing relationship with the lender, Central Valley Community Bank. "The tribe has been a customer of theirs for over 40 years," he said. "Boom, we were off to the races."
Newland worked with Old Mission Bank in Sault Ste. Marie, Michigan.
"This is a small-town small bank and they had their staff there well into the night to get this done," he told Law360. "If we went to a bigger bank, I'm not sure we would have gotten that level of service."
The Flandreau tribe of South Dakota was co-plaintiff with Big Sandy and the
Santee Sioux Nation of Nebraska
in a lawsuit challenging the SBA's early decision to
bar casinos from PPP eligibility. All three tribes exited the suit in late April and have received PPP loans.
"The use of these funds is pivotal to financial stability of these facilities during this pandemic and will supplement the efforts to safely reopen in accordance with the directives from each tribe's leadership," Pearman told Law360.
About 60% of tribal casinos qualify as small businesses with fewer than 500 employees, according to the Flandreau tribe's April complaint. There are 527 tribal casinos in the U.S., according to the
National Indian Gaming Commission.
Asked how many tribal casinos have received PPP loans to date, SBA spokesperson Carol Wilkerson said the agency will post individual loan data after the PPP process has ended.
About $9.8 billion has been distributed to approximately 3 million businesses of all types across the U.S. as of May 8, according to a preliminary report from the SBA.
--Additional reporting by Andrew Kragie and Andrew Westney. Editing by Jill Coffey.
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