Small casinos still screwed; Hedge funds on the prowl

Evidently someone got American Gaming Association President Bill Miller’s letter to Donald Trump before POTUS’ eyes. We say “evidently” because somebody (probably the White House), in an effort to be Solomonic, persuaded the Small Business Administration to effect a compromise. It has replaced a mossbacked constraint on emergency assistance with a slightly less archaic one. Heretofore, companies that derived over 33% of their revenue from gambling were excluded from the Paycheck Protection Program and other funds. Now, if you have less than $1 million in total revenue and get less than half of that from gaming, you’re eligible for relief. That might help a lot of taverns and slot routes but small casinos continue to get the shaft.

While the Congressional Gaming Caucus has been deferential to the SBA, Miller has not held back and he was in rare form yesterday. Take it away, Bill! “Despite promising conversations with the administration over the last two weeks, this updated guidance falls woefully short of fully addressing antiquated, discriminatory policies that have, to date, restricted small gaming companies from accessing critical loan support … Small gaming businesses that have closed to comply with mandatory government orders will continue to be denied access to this critical lifeline to support their employees because of this half-measure.” He then thanked the Gaming Caucus and said the AGA would now be pinning its hopes on the legislative process. As Rep. Susie Lee theorizes, the exclusionary language was probably lazily pasted in from 2009 Great Recession relief and this Congress’ clear intent was to help Small Gaming. Miller’s new wish list is:

• Ensuring government loan programs are accessible to all segments of the gaming industry.
• Advancing measures that protect AGA members from additional economic harm and enhance financial solvency.
• Policies to aid the industry’s recovery over both the short- and long-term.

Concluding with a note of restraint, Miller wrote, “The AGA has started researching consumer attitudes and behaviors and engaging operators and regulators on best practices so our industry can be ready to go when it’s healthy and safe to do so.” Already one small casino in Lake Tahoe, a reader informs us, has closed permanently. How many more will be casualties of the SBA’s old-maid policies?

* This was inevitable. Hedge funds are trying to devise ways of raiding the Paycheck Protection Program. Yeah, the one that small casinos don’t qualify for, per the SBA. Reports Bloomberg, “Ironically, hedge funds are designed to employ as few people as possible so star traders don’t have to share millions of dollars in fees. The industry gets its name from the premise it can generate gains even when markets fall.” The moral bankruptcy of what hedge funds like First New York and SkyBridge has drawn admonitions from the likes of investment advisor Aksia, which cautioned that it showed “poor moral judgment and potentially hurting the reputation of the alternatives industry, but it’s also probably crowding out struggling workers and businesses severely impacted by Covid-19.” Added Managed Funds Association President Bryan Corbett, “we have provided guidance to our members that we do not believe the money in this program was intended for managers general partnership interests.” By the way, have we mentioned that incoming Caesars Entertainment CEO Tom Reeg is a former hedge-fund manager?

* Scientific Games says it is in a good position to ride out the second quarter. Workforce reductions and pay cuts have saved it $100 million so far, with another $50 million anticipated in 2Q20. The company is sitting on $200 million in cash and has drawn down $480 million in credit. Its SciPlay subsidiary has $130 million in cash and—mirabile dictu!—no debt. We should all be so solvent.

* Culinary Union members in Las Vegas probably can’t get back to work soon enough. Susan Stapleton reports that 98% of them (out of 307,000) are currently unemployed and some have already burned through their health insurance. Wynn Resorts‘ May 15 extension of pay and benefits was, according to the local’s Bethany Khan, a Wynn/Culinary-brokered deal.

* Vanguard Lounge, which brought the velvet rope to Downtown is gone and won’t be missed. Its space will be filled sometime in June (it is hoped) by Lucky Day. The latter will be characterized by “a mezcal and tequila drinks menu and a DJ booth created from a salvaged church pulpit.” We hope few sensibilities will be offended.

* A point of light: Leading addiction-treatment center CrossRoads of Southern Nevada is opening its beds to Coronavirus patients. It’s also taking homeless victims. “As many of you may know, Las Vegas made national news highlighting the way the city was ‘housing’ our homeless,” said CrossRoads CEO Dave Marlon. “We even saw pictures of squares marked out on the asphalt in a parking lot for the homeless to sleep in.” Yes, that was a disgrace. In addition to accepting patients from Catholic Charities and the Veterans Administration, CrossRoads will be providing mental-health support to those left at loose ends by the closure of Montevista and other psychiatric facilities. Bravo.

* Coronavirus is paying dividends for online-gaming providers like Google Play, which raked in $174 million during March, over half of that for Coin Master. People suffering from cabin fever will have the understandable urge to ‘game’ somehow and predictions of an Internet surge show all indications of coming true.

Our own cabin fever is manifesting itself in Internet shopping for SACDs, to feed our new surround-sound system (a Christmas present to ourselves). Quad lives!