FAQ – Indian Gaming and COVID-19

04/15/20

Regulation

The voluntary decision of tribal nations across the country to temporarily close their gaming facilities demonstrates the commitment of tribal nations to supporting the health, safety, and welfare of their citizens, as well as their employees, patrons, and the general public at large. While many state governments issued varying degrees of public safety guidelines, tribes, as sovereign nations, were not directly governed by such guidelines. Nonetheless, the collaborative efforts of tribal nations to work with their state partners establishes one of the central reasons that the Indian Gaming industry has seen the successes it has enjoyed over the last several decades.

As the primary regulators, Tribal Gaming Regulatory Authorities (“TGRAs”) had numerous decisions to make in terms of how to manage the closures that the COVID-19 crisis has brought about. Similarly, TGRAs will have many decisions to make when tribal gaming operations re-open. Such decisions may include ensuring sufficient regulatory staffing, technological start-up protocols, appropriate notices to be sent to the National Indian Gaming Commission (“NIGC”), and, depending on a given tribe’s compact with the state, possibly state agencies, and continuity in backgrounding and licensing compliance.

Further, tribal regulators will have much work to do in coordinating with tribal operations personnel and tribal leadership to ensure the re-opening of facilities runs smoothly from both a business and a public policy perspective. This link provides more detailed guidance from the National Indian Gaming Commission.

Question: What federal agencies should Indian Gaming operators or regulators coordinate with during their continued shutdowns or re-opening?

Answer: As discussed elsewhere in these FAQ's, for funding opportunities to off-set the devastating loss of governmental revenue caused by the crisis, coordinating with DOI, Treasury, and SBA will be critically important.

For regulatory matters, NIGC serves as the chief federal agency that regulates Indian Gaming.

The NIGC remains operational and continues to monitor and review gaming operation activity remotely, however NIGC is conducting most functions via off-site telephone, email and document request and review, and other methods that do not require in-person contact.

For risk management, tribal operators should work with their larger tribal risk management teams to engage with the Federal Emergency Management Agency (“FEMA”), as well as their local and state counterparts.

Question: When can we re-open our casino?

Answer: That is for each individual tribe to decide. Some may wish to rush to re-open, and others may wish to follow the lead of other tribal nations and state governments when it comes to re-opening their gaming facilities. While this current unprecedented coronavirus crisis has caused unfathomable pain throughout Indian Country, attention should be paid to exploring opportunities that may arise in the aftermath. Tribal nations may wish to consider other types of games across a wider range of platforms that would reach more patrons in manners that would best align with the social distancing guidelines provided by the Centers for Disease Control (“CDC”) during this crisis and position tribal nations well for the future and beyond.

Potential Funding Resources

Question: Our Tribe’s gaming facility business employs fewer than 500 employees. Can we apply for the loans offered through the Paycheck Protection Program (“PPP”) passed in the CARES Act?

Answer: Not at the moment. Congress, however, fully intended to make the PPP available to small tribal businesses, including gaming enterprises, by including the language “any… tribal business concerns” as defined in the HUBZone program (Section 31 of the Small Business Act). In this regard, Congress made clear that any and all tribal businesses with under 500 employees should be eligible for PPP regardless of the nature of their business. Nonetheless, the Small Business Administration’s (“SBA”) interim final rule for implementing the PPP specifically carves out tribal gaming enterprises, deeming them ineligible for PPP loans, despite the fact that Congress intended to render them eligible. Many tribal nations, national tribal organizations, and members of Congress are currently advocating to encourage the SBA and Treasury Department to correct this error and allow tribal gaming enterprises to apply for PPP. Until this SBA rule changes, however, tribal gaming enterprises will remain ineligible for PPP loans.

Question: We understand that $8 billion has been allocated for stabilization funding for tribal nations. Our gaming operations were the economic lifeblood of our community. Are any of the stabilization funds available to off-set the lost revenue that funded critical programs for our citizens, and in many cases, our neighbors?

Answer: Implementation of the CARES Act Stabilization Fund is a work in progress. Currently, the Treasury Department and DOI have been tasked with administration of the $8 billion allocation contained in the Act. This is despite the fact that the need in Indian Country is abundantly clear given that the complete shutdown of the $39.1 billion Indian Gaming industry has been a central driver of tribal funding (one that subsidizes the shortfalls of federal funding). Treasury and DOI will be making a decision soon on how they will distribute funding to tribes that are very differently situated. Factors that the Departments are considering balancing right now include tribal population, economic impact of revenue loss, whether there should be any base funding or caps for tribes, and whether land base should impact the analysis. Understandably, there is a diverse variety of positions throughout Indian Country as to how the Departments should distribute the funding. Indian Country, however, remains unified that stabilization funding is critical to the welfare of not only their citizens, but surrounding communities. As these developments are fluid, these facts will be updated as appropriate.

Business Interruption Insurance

Question: Will our Tribe’s Business Interruption Insurance cover the costs we incur from closing our casino during the COVID-19 crisis?

Answer: We recognize that some tribal nations held Business Interruption Insurance to cover gaming operations and some did not. Of those that did, the extent to which your policy covers the COVID-19 crisis depends significantly on the language of your policy. Should difficulties arise with insurers over coverage for COVID-19 claims, advocacy, and in a worse-case scenario, litigation, may be required. Since every issue in this area is case-by-case and dependent upon the specific language in the policy in question, we recommend you work closely with your in-house counsel as well as competent legal advisors to assess options, should policy payment be an issue.

Vendor Relationships (Force Majeure/Breach of Contract Considerations)

Question: We closed our casino out of COVID-19 concerns, and we are wondering if we can utilize the “Force Majeure” clause in our contracts with vendors to help mitigate financial losses during this?

Answer: The answer depends upon the specific language within your vendor contracts. We are in the midst of a worldwide pandemic. Ever-expanding governmental restrictions on travel, movement, and large gatherings have resulted in significant business interruptions and widespread event and travel cancellations across the United States, with a particularly salient impact on the event, tourism, restaurant, airline, venue rental, sports, and entertainment sectors.

While it is unlikely that many tribes will have language in their contracts listing a “worldwide pandemic” as a qualifying event for the Force Majeure provision, many Force Majeure provisions refer to cancellations or nonperformance resulting from governmental restrictions, which are certainly at play in the COVID-19 crisis.

Tribes will have very strong arguments that the closure of tribal gaming facilities is necessitated by governmental restrictions on travel and the US CDC guidelines—which prohibit gatherings of ten or more people. For instance, on March 15, New York City shuttered tens of thousands of public schools, restaurants and bars in the largest shutdown in the country, and other cities and states instituted similar restrictive interventions. Tribes should rely on their counselto review the language contained within their contracts with vendors.

Ongoing Legislative Tracking

Question: Is Congress considering additional legislation to address the lost revenue the COVID-19 crisis has caused for the Indian Gaming industry?

Answer: Yes, but now more than ever, tribal nations must be assertive in calling for necessary relief and communicating the dire need throughout Indian Country.

Congress is currently considering building on its PPP legislation and efforts are underway to move the SBA to take a broader view of PPP eligibility that includes tribal gaming and financial business.

Because of the COVID-19 crisis, tribes have lost significant revenue—revenue that, under the auspices of IGRA, offsets the federal government’s trust duty and obligation to fund tribal schools, health care, cultural preservation, and much more. During this time of great crisis, Congress has a duty and obligation to ensure IGRA’s pillars of tribal self-government and tribal economic development are not discarded or left behind. Indian Country must continue to advocate for stimulus packages that recognize the trust duty and obligation Congress has to compensate the lost Indian Gaming revenue as a result of the COVID-19 crisis.

Note: The federal agencies involved in administering the programs and funds established in the CARES Act are in the process of issuing guidance for eligibility and how to access the assistance discussed above. Therefore, the information we are providing is subject to change. Please check back periodically for updates.

This is a fluid and rapidly changing situation and these resources are current only as of the date of publication. We recommend that you contact your local Quarles & Brady attorney regarding the most up-to-date information or with any other questions regarding this subject matter, or contact Jonodev O. Chaudhuri: (202) 780-2635 / [email protected]

Indian Gaming and COVID-19

We have updated our Privacy Policy. Please click here to view our new policy.