The CARE Act added Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL) for businesses to recover from the COVID-19 pandemic. A question many of our clients have asked is, “I’m a professional gambler. Can I apply for one of these loans?” The answer is no.
It’s not as if a professional gambler can gamble in most locations today (casinos are closed everywhere, though those residing in states with online gambling can partake), so professional gamblers are being impacted. The problem is a regulation adopted in 1996. From 13 CFR § 120.110 (What businesses are inelgible for SBA business loans?). 13 CFR § 120.110(g) states:
Businesses deriving more than one-third of gross annual revenue from legal gambling activities.
(All illegal activities are ineligible per 13 CFR § 120.110(h).)
The American Gaming Association wants this changed; it also prevents small casinos, such as those in South Dakota, from applying for these loans. But changing a federal regulation takes time. The change must be published in the Federal Register, comments must be taken, etc. It’s a near certainty that the COVID-19 emergency will be long past when the regulation is changed (and that assumes the SBA decides to make a change).
Is this fair? No. But it’s reality.
Tags: 2020.Tax.Season