Bicycle, Gardens Casinos, Other California Card Rooms in Bind for PPP Funds

Posted on: April 14, 2020, 04:42h. 

Last updated on: April 14, 2020, 05:50h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Bell Gardens, Calif. and Hawaiian Gardens, Calif. are homes to the Bicycle Hotel and Casino and Gardens Hotel and Casino – two of the dozens of Golden State card rooms that aren’t eligible for assistance under the Small Business Administration’s Paycheck Protection Program (PPP), which is putting these municipalities and others in precarious financial positions.

The Bicycle card room near Los Angeles and other card rooms need PPP funds and are asking California politicians for help. (Image: KCET.org)

PPP is part of the recently passed $2.2 trillion Coronavirus Aid, Relief, and Economic Security Act (CARES Act) and while the law is seen as salvation for some businesses, in its current form, it stipulates that enterprises generating a third or more of their revenue from legal gambling activities aren’t eligible for federal funding.

With California card rooms among the state’s first gaming venues to shutter because of the coronavirus, cities such as Bell Gardens and Hawaiian Gardens are left with revenue voids that are almost impossible to fill over the short-term, prompting local leaders to ask Gov. Gavin Newsom (D-CA) to get involved.

For over 35 years, the support of the Bicycle Hotel and Casino has enabled the city of Bell Gardens to provide critical and essential services to our residents, and without the ability of the Casino to continue its normal operations, the City will also not be able to continue its normal operations,” said Mayor Alejandra Cortez in a letter to Newsom obtained by Casino.org.

Cortez notes the card room accounts for $15.2 million, or 46 percent of Bell Gardens’ general fund revenue, and that the city will lose over $2 million if the Bicycle — also known as “The Bike? — remains shuttered through the end of this month.”

Big Economic Blow

The Golden State’s approximately 70 card rooms, which have been closed for about a month because of COVID-19, are important contributors to local economies. The venues drive total annual economic impact in excess of $5.6 billion and support more than 32,000 direct and indirect jobs, according to the California Gaming Association (CGA), the card rooms’ trade group.

The CGA is pressing the state’s 55-member congressional delegation to amend PPP, with President Kyle Kirland saying the COVID-19 pandemic may force some card rooms to permanently lay off staff. Others may not be able to reopen after the virus eases and the state’s shelter-in-place protocols are lifted.

Kirkland said in a letter to California’s House and Senate members that the aim of the CARES Act was to help businesses with 500 or fewer employees – a qualifier applying to card rooms – and that gambling stipulation was included in error.

On Tuesday, Newsom – the first US governor to issue a statewide shelter-in-place directive – detailed six points that would aid in getting life back to normal in the largest US state and, perhaps, business back to usual for card rooms.

Those points are community testing and monitoring, prevention of infection for high-risk patients, the ability of hospitals to handle surges in coronavirus cases, the ability of businesses, schools, and healthcare facilities to practice social distancing, progress on vaccines to meet demand, and plans for reinstating stay-at-home measures if needed.

Other Implications

In Hawaiian Gardens, home of the Gardens Casino, the city is being pinched by the card room’s closure. Mayor Jesse Alvarado said in a letter to Newsom the gaming venue accounts for 68 percent of the city’s general fund, and with the property not open, the municipality will have to use reserve funds to balance a $1.5 million loss in the current fiscal year.

Alvarado is asking the governor to redirect capital in the state’s $97 million gambling control fund to keep the Gardens Casino afloat, noting a permanent closure of the card room would have “devastating” consequences for the city.