Smoking bans and casino revenues: Survey results from six U.S. states

The conventional wisdom among casino industry executives is that smoking prohibitions result in fewer casino visitations, less time spent gambling, and, hence, lower gaming revenues. This paper presents the results of a random sample telephone survey of 3,839 respondents in five New England states and 401 respondents in Illinois. The survey finds that a majority of gamblers smoke free gaming floors and that even large numbers of smokers prefer the same. In retrospect, the assumed relationship between smoking bans and declining revenues, which often relies on Illinois, Colorado, and Atlantic City as exemplary case studies, can be explained by macro-economic factors, such as the general economic climate, improved competition from adjacent jurisdictions, and the introduction of convenience gaming, rather than smoking bans. Industry claims about the relationship between smoking prohibitions and gross gaming revenues that use Illinois, Colorado, or New Jersey as evidence of the negative fiscal impacts of casino smoking prohibitions ignore the obvious correlation between the timing of recent smoking bans, the onset of the Great Recession, and the general decline in gross gaming revenues in most U.S. casino jurisdictions, regardless of the existence or absence of casino smoking prohibitions. Significantly, the Illinois and Colorado smoking prohibitions both took effect in January 2008, which is the month that officially marks the beginning of the Great Recession. Similarly, the city council in Atlantic City, New Jersey passed an ordinance in 2006, which limited smoking on the gaming floors of that city’s 11 casinos to no more than 25 percent of gaming space. An outright ban on smoking in the casinos took effect in October 2008. In that instance, industry officials again blamed the smoking ban for a decline in gross gaming revenues. However, as one might expect of an industry fueled by discretionary consumer spending, the two reasons most frequently cited by Illinois’s casino gamblers for reducing the number of visits to casinos is the increased cost of gasoline (40%) and the increased cost of living (35%) (e.g., food price inflation). Another significant cluster of reasons cited by Illinois’s casino gamblers for reducing the number of visits to casinos is loss of income (16%), falling behind on bills (15%), job loss (12%), and declining home values (11%).