Industry leaders hopeful federal aid package will persuade gaming employee retention

Industry leaders hopeful federal aid package will persuade gaming employee retention

  • Howard Stutz, CDC Gaming Reports
March 30, 2020 11:18 AM
  • Howard Stutz, CDC Gaming Reports
  • Other

For many casino industry employees, Tuesday might be their last day with a paycheck for the foreseeable future.

Industry leaders and congressional representatives hope that won’t be the case following last week’s signing of the $2.2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act.

“The CARES Act provides tax relief to help gaming companies keep workers on the payroll,” American Gaming Association CEO Bill Miller said in a message to the trade group’s membership Friday.

Miller said the Act also “opens access to critical capital through loans for all industry segments; provides direct economic support for millions of American workers and their families; and offers vital stabilization funding for tribal governments.”

With essentially the entire commercial and tribal casino in the U.S. shut down by the pandemic, some 650,000 casino and resort employees are on the sidelines, losing out on an estimated $74 billion in total annual wages, according to the AGA.

Global Market Advisors Partner Brendan Bussmann said the Act offers casino employees additional resources.

“In an unprecedented and uncertain time, the CARES Act provided a necessary lifeline to the gaming industry and tribal communities across the country,” Bussmann said in an email. “This is by far the most impactful event that our industry has faced to date, and it will be Acts like this that help it recover more quickly.”

Casino operators and gaming equipment manufacturers have drawn billions of dollars from credit lines in order to shore up balance sheets that won’t be seeing revenues or cash flow for a yet-unknown amount of time.

Companies have been trying to retain liquidity in order to maintain properties until they are allowed to reopen. Analysts have given a handful of companies timelines of between six months to a year before they might potentially run out of money.

Paying workers

Congressional sources spelled out various sections in the Act that could entice casino companies to keep as many employees on the payroll as possible until reopening.

One provision, the employee retention tax credit, offers employers a tax credit for 50% of the wages paid to employees during the crisis. The credit is available to employers whose casinos were fully or partially suspended due to COVID-19-related closure orders.

Several gaming companies said they would cover wages and benefits for at least two weeks, or through the end of the month. Shutdown orders from governors and state gaming regulators began March 13.

Both Las Vegas Sands Corp. and Wynn Resorts have said they will pay employees through the duration. Boyd Gaming on Friday extended employee payments through April 10.

Penn National Gaming, which will continue to pay employees through Tuesday, is furloughing its 26,000-person workforce on Wednesday. Billionaire Tilman Fertitta, who owns the five Golden Nugget casinos in Nevada, Louisiana and Atlantic City, and several hundred restaurants under numerous brands, furloughed 40,000 workers two weeks ago.

‘Open for business’ incentive

One of the provisions in the Act includes $1.5 billion for the Economic Development Administration, which would support “open for business” advertising campaigns, similar to what took place in tourism communities surrounding the Gulf of Mexico that suffered during the 2010 BP oil spill. The funds wouldn’t be utilized until after the crisis is over.

Nevada Representative Dina Titus, whose district includes the Las Vegas Strip, helped secure the funds through her role as chairwoman of the subcommittee that oversees the Economic Development Administration.

“I am confident that this legislation will benefit the Las Vegas Valley and help ensure that workers on the Strip have a job to return to when this crisis is over,” Titus said in a statement.

Her spokesman, Kevin Gerson, added that funds could allow “the entire travel and tourism industry” to utilize “open for business” campaigns.

Other provisions targeting the casino industry include the deferral of certain employer payroll taxes, a five-year carryback on net operating losses, and an easing of limits for business interest expenses. Another provision adds a fix to the Qualified Improvement Property program, which allows businesses, particularly in the hospitality industry, to immediately write off costs associated with improving facilities instead of having to depreciate those improvements over time.

Last week, Nevada senators Jacky Rosen and Catherine Cortez Masto said more than $6.5 billion was set aside in the Act for organizations and programs to rebuild impacted industries, such as tourism or manufacturing supply chains, and toi help mitigate the economic crisis in local communities.

Nevada is considered to be one of the hardest-hit states from the casino industry closures, because 40% of the general fund budget comes from taxes on gaming and tourism. The Nevada Resort Association said recovery from the pandemic’s shutdown could take up to a year and a half with an economic impact reaching almost $39 billion.

Howard Stutz is the executive editor of CDC Gaming Reports. He can be reached at hstutz@cdcgaming.com. Follow @howardstutz on Twitter.