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SBA Cannot Loan to Casinos, The Gardens Casino in Hawaiian Gardens is Trying to Change That

BY BRIAN HEWS

The Gardens Casino in Hawaiian Gardens, which voluntarily shut down in March, provides 70% of the revenue to this tiny city in Southwest Los Angeles County.

City Manager Ernie Hernandez indicated to HMG-LCCN at the time of closing that they would lose a staggering $1-$1.5 million per month due to the closure.

“Everyone is concerned,” said Hernandez, “if this continues were talking severe cuts, furloughs, and cuts in city and youth services, it will be a severe  impact on the quality of life in our city

And there is a glitch in the SBA system for casinos applying for loans that might make it harder for the City.

The Small Business Administration has a long-standing rule that doesn’t allow loans for gambling businesses which has a wide-ranging effect not only in Hawaiian Gardens but across the state and the country.

 

In the SBA’s guidelines, they cite a 1996 federal regulation outlining what businesses cannot apply for a loan from the agency. “Businesses deriving more than one-third of gross annual revenue from legal gambling activities,” are among the ineligible.

Seeking SBA help

Keith Sharp, the Gardens Casino’s general counsel, remains hopeful that they can still receive SBA funding.

In an interview Sharp stated, “We are battling for change, but it’s hard right now. We remain optimistic that they will loosen the reins on the stimulus package. It’s hard, many of our employees work just above minimum wage and rely heavily on tips.”

“We are asking the administration to inform the SBA that the stimulus monies were meant for all businesses and to cut through the usual red tape and conditions so that our casinos will be able to weather this crisis and recall our employees as soon as possible once public health officials give the green light.”

“We are asking the Governor, Legislature and Attorney General to return to the Cardroom industry the $97M surplus of our money that they are holding. The return of those funds would be a tremendous help to our businesses, employees and communities.”

In a letter sent to Gov. Gavin Newsom, Hawaiian Gardens officials said the closure of The Gardens Casino is having a major effect on the city and echoed Sharp’s requests.

“The [pandemic] closure has the most significant financial impact to any city with a casino in the state of California, the [tax revenue from The Gardens Casino] has played a critical role in the city’s ability to fight crime and roll back major gang issues.”

The City can’t estimate how many employees will be furloughed, but officials have issued advance notices to all city workers so when the reduction takes place, everyone will be “prepared.”

City officials asked Newsom to:

Tap the $97 million surplus in California’s gambling control fund to help The Gardens Casino re-open when it is safe, while helping employees and the community during the crisis

Clarify the policy regarding the casino’s ability to tap state and federal relief funds, including un-collateralized fast-track loans.

There is hope. On the national level,  American Gaming Association President/CEO Bill Miller said Friday that he wants the SBA to review the guidelines it established for the PPP.

Miller said the agency used a regulation that will keep many small gaming businesses from getting funds. The funds are needed to keep their employees on the books while the coronavirus pandemic has brought nearly all gaming activity to a standstill.

“Unless amended, these initial guidelines will irreparably harm one-third of the US casino industry and the hundreds of thousands of Americans that rely on gaming businesses for their livelihood,” Miller said in his statement.

 

 

 

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One Response to SBA Cannot Loan to Casinos, The Gardens Casino in Hawaiian Gardens is Trying to Change That

  1. Peace Corp Reply

    April 11, 2020 at 6:42 pm

    Need to replace club, with a food pantry, and work in partnerships with business/ hotels/catteries and feed people.

    LA Mayor wants to create Peace Corp to get cities back to the basics, which not only HG needs but all of the surrounding cities.

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