Last April, a Nevada first-year congressman urged the federal government to expand coronavirus aid to her state Gaming industry. Two weeks after the change went into effect, her husband’s casino company received millions of dollars in government-supported loans.
In a letter to the heads of the Treasury and Small Business Administration, Democrat Susie Lee urged the agencies tasked with managing the Paycheck Protection Program Rethink the regulatory language that excluded gambling companies from the program’s small business aid that provided forgivable loans to help cover wages and overheads during the pandemic.
“Every day that goes by without relief adds further harm to the employees of these companies and their families,” wrote Lee. “The SBA’s position that these small businesses are not eligible for necessary subsidies because of their involvement in the gambling industry belies the economic realities of their location and will bankrupt countless small businesses in Nevada.”
In a matter of weeks, federal regulators made the exact change they wanted. In late April, the Treasury Department and the SBA updated their PPP eligibility guidelines to include companies with fewer than 500 employees who derive more than half of their income from gambling.
“On further consideration” SBA said“The Administrator, in consultation with the Minister, believes that this approach is more consistent with the policy goal of making PPP loans available to a broad segment of US companies.”
It was a huge win for the casino industry, and for the Nevada economy in general, which relies not only on casinos but on other companies that happen to offer games like slot machines. One Nevada-based gaming company that benefited from the change in the PPP program was Full House Resorts, a casino developer led by CEO Daniel Lee, husband of Rep. Lee.
About two weeks after the SBA made PPP loans available to the gambling companies, Full House secured two such loans totaling approximately $ 5.6 million Filing with the Securities and Exchange Commission. The company said the funds will be “primarily used to reinstate hundreds of employees” and to prepare for the reopening of two of its casinos, none of which are in Nevada: Rising Star Casino Resort in Indiana and Bronco Billy’s Casino in Colorado.
A day after this article was published, a Lee spokesperson told The Daily Beast that the Congresswoman had been informed that Full House was planning to apply for these loans in the days following the SBA’s change in PPP eligibility and was notified once the loans have been approved. However, the spokeswoman said she played no role in the company’s decision to apply for the loans.
“She is not involved in any aspect of the business or decision-making of Full House,” the spokesman wrote. “She had no control over the decision to submit the application, and she had no control over whether that application was approved or denied. The terms and details under which Full House Resorts obtained its PPP loan are solely between Full House Resorts and the regulators.
Lee’s work to expand PPP eligibility for gambling companies has benefited numerous companies, particularly in Nevada, beyond Full House. And she wasn’t the only Congresswoman pushing for that change. One day after your letter to the Treasury Department and SBA, Lee signed on a letter Created by the entire Nevada Congressional delegation calling on House and Senate leadership to explicitly include small gaming companies in future coronavirus relief legislation.
But Lee’s direct lobbying with federal regulators appears to have paid off immediately for gambling companies seeking federal aid. In fact, it’s an accomplishment that she prominently advertises on her website, and her office highlighted that effort in its statement to The Daily Beast.“Congressman Lee has been a strong advocate of Nevada’s working families and her work to ensure that our state’s major industries are not unjustly excluded from this program shows that it ensures her commitment to protecting working families,” said her spokeswoman . “Congresswoman Lee will continue to focus on her work in Congress to fight for Nevada’s working families who need a helping hand now more than ever.”
Congressmen’s push to expand the eligibility of the PPP loan program also underscores how frantic a scramble between distressed industries to get government money after the pandemic-induced economic slowdown – and how clever those industries and their pioneers were in getting the term out Define “small business”.
Prior to the pandemic, Full House had around 1,600 employees, according to its SEC filing – well over the 500 employee limit that was the designation for a “small business”. But casinos it owns and operates, including Rising Star and Bronco Billy’s, each have fewer than 500 employees and so qualify for SBA rules relief intended to help franchises or affiliates of larger companies.
Like other gambling companies, Full House has been hit hard by the coronavirus pandemic and the resulting stay-at-home orders. It fired almost all of its staff or took leave of absence; Total full house employment fell to just 30 in May, according to the SEC filing. From February 21 to March 18, the share price fell more than 83 percent from $ 3.59 per share to just $ 0.53.
Among the shareholders affected by the decline were Representative Lee and her husband. According to her Filing personal financial disclosure For 2018 and early 2019, they owned full house shares and stock options in the millions through broker, trust and retirement accounts.
The share price is nowhere near its pre-pandemic high. But since the SBA reversed course and allowed casinos like Full House for PPP loans, the company has regained a significant portion of its stock value. When Lee sent her letter to the Treasury Department and the SBA, Full House shares were trading at $ 1.04. When the SBA changed its guidelines, the price was as high as $ 1.17. On Friday, Full House’s shares closed at $ 2.00 per share.
– This article has been updated to reflect Lee’s office statement that she was aware of the loans awarded to her husband Society.