Analysis

Fearing COVID-19 Ruin, Midwest Tribes Demand Casino Relief

By Emma Whitford
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Law360 (April 22, 2020, 8:12 PM EDT ) Bob Gravelle, director of gaming at the Bay Mills Resort & Casinos in Michigan's Upper Peninsula, got his last paycheck on April 16. At 52, he has high blood pressure, and he's grateful that tribal leadership closed the casino as a health precaution during the coronavirus pandemic.

But navigating unemployment for the first time in his 30-year career has proven stressful. He's awaiting his first check and "watching every nickel" he spends.

"There's a lot of uncertainty for me and our whole casino," Gravelle told Law360. "We're all worried and scared."

Tribes with casinos that employ fewer than 500 workers have had to dip into their reserves and furlough staff because these businesses are barred from coronavirus relief loans through the U.S. Small Business Administration, Midwest tribal leaders told Law360. They're now urging Congress to provide them with direct relief.

"Tribes are not equipped to handle this," said Aaron Payment, president of the United Tribes of Michigan and chair of the Sault Ste. Marie Tribe of Chippewa Indians in the eastern Upper Peninsula. "We're getting closer and closer to the precipice of financial ruin."

April guidance from the SBA excluded casinos from the federal Paycheck Protection Program for coronavirus relief. Congress initially authorized nearly $350 billion for the program, which was used up in under two weeks, by April 16. Small businesses with PPP loans can have their loans forgiven if they maintain payroll.

The SBA has a long-standing policy of withholding loans from businesses that get more than a third of their gross annual revenue from gambling.

Yet many tribes rely on casinos to fund their government programs and services, including health care. In rural areas, Payment said, tribal casinos are "critical to local economies," employing tribe members and nonmembers alike.

While large tribal casinos are also losing revenue because of the coronavirus, small casinos are hurting acutely because they have smaller rainy-day funds, said Scott Vele, director of the Midwest Alliance of Sovereign Tribes. The alliance represents 134,000 people across 35 tribal nations, according to its website.

"A lot of the tribes in the Midwest would have fit within that realm of specifications for that [SBA] program," said Vele, who is a member of the Stockbridge-Munsee Band of Mohican Indians in Wisconsin. "Those smaller tribes that are farther north, that are farther into the depths of the state, away from the major highways and thoroughfares — those are the ones that really need the help."

There are 92 tribal casinos across Michigan, Minnesota, Iowa and Wisconsin, according to the National Indian Gaming Association. The group does not track how many casinos have fewer than 500 employees.

Bay Mills Indian Community Chairman Bryan Newland told Law360 that his tribe will continue to cover health insurance for its approximately 400 workers across two casinos through at least the end of May, at the cost of about $150,000 a month.

"We've got employees who are battling cancer and other chronic conditions. We didn't want to just throw them to the wolves," Newland said. The monthly cost "may not be big for some companies and organizations, but I'll tell you — for our tribe, that's painful."

The Bay Mills community has 2,200 members, 45% of whom are children. The tribe has no coronavirus cases to date, though surrounding Chippewa County has confirmed two cases.

"It's a relief to know that that [insurance] aspect is one less thing to worry about for at least another month," said Robin Teeple, 45, a surveillance supervisor at Bay Mills Resort & Casinos and mother of four.

Payment's Sault Ste. Marie tribe has five casinos, employing between 29 and 480 people each. He told Law360 that his council is continuing to pay all of its 872 workers out of reserve funds, even though all of the casinos are closed. He's secured health insurance coverage for workers for 90 days.

By June, Payment anticipates that all of the reserves will be exhausted. Already, $8 million has been spent on payroll. "We're at the point right now where we're just beginning to move people over to unemployment," he said.

An interim SBA rule published April 14 expanded loan eligibility to businesses whose legal gambling revenue did not exceed $1 million in 2019 and comprised less than half of their total revenue that year. Tribal casinos have too much gambling revenue to fit in that bracket, Newland said.

The updated SBA guidance helped "taverns with slot machines," he said. "They were aware of the concern of Indian Country and made the deliberate choice to keep us excluded."

The SBA declined to comment on tribes' concerns about being excluded from PPP funds.

But the agency's April 14 rule says that it "appropriately balances the longstanding policy reasons for limiting 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."

The U.S. Senate passed a new federal relief bill Tuesday that could provide $250 billion in new funding for the PPP, and the House is expected to vote on the proposal Thursday. President Trump has indicated he'll sign it.

Asked if the SBA might expand eligibility for casinos with this money, spokesperson Carol Wilkerson said, "We can't respond to pending legislation."

Newland, who took a voluntary 40% pay cut when furloughs began at his casinos in mid-April, told Law360 that he had no details on the new bill. He and Payment raised their concerns on a conference call Tuesday with tribal leaders and U.S. Sens. Gary Peters and Debbie Stabenow of Michigan.

"Congress needs to assert its lawmaking powers to direct SBA to include tribes and tribal casinos very clearly," he said.

A separate $8 billion pot of relief funds earmarked for tribes, celebrated in Congress last month as a meaningful win, has yet to be distributed, according to the NIGA. It's "run into its own issues," the group said in a statement.

--Additional reporting by Andrew Kragie and Andrew Westney. Editing by Aaron Pelc.

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