Nevada
casinos' worries may be just smoke
By
Liz Benson, Our Partners at the Las Vegas Sun
LAS
VEGAS, Nevada -- Neither of two competing measures on next
month's ballot to restrict smoking in Nevada dares to prohibit smoking
in casinos.
The gaming-floor
exemption to both smoking ban proposals reflects Nevada's libertarian
attitude toward compulsive behavior and the understanding that smoking,
drinking and gambling go hand in hand.
Preventing gamblers
from smoking, the assumption goes, would be bad for business, and
therefore bad for the state.
Some gaming
insiders are quietly worried that in the next decade, a wave of
public opinion may be calling for a total ban on casino smoking.
But evidence
suggests that Nevada could acclimate to nonsmoking casinos and that
the gaming industry could actually benefit by it over the long haul
- while sparing casino employees the health risks of working around
smokers.
Question 5 on
next month's ballot, supported by the Nevada State Medical Association,
the American Cancer Society and other health groups, would ban smoking
in most venues save for the gaming floors of casinos. The initiative
exempts bars that don't serve meals, although most bars in Nevada
- partly to comply with a law allowing slot machines in bars only
if gaming is "incidental" to the business - also prepare
food.
Question 4,
backed by gaming interests as a response to Question 5, would ban
smoking in retail stores, galleries, libraries, museums and similar
places that already tend to be nonsmoking, while allowing bars as
well as grocery stores and convenience stores with slots to continue
to accommodate smokers in those gambling alcoves.
If both petitions
get more than half of the vote, the petition with the most votes
would win.
The gaming industry's
opposition to smoking bans is based on anecdotal information about
customer preferences and a long-standing belief that smokers, who
tend to gamble more than nonsmokers, have a right to smoke.
"It would
make our job easier if no one smoked, but the fact is that they
do," said Judy Patterson, executive director of the American
Gaming Association. "We have to balance two sets of needs."
To accommodate
nonsmokers, some casinos have improved their ventilation systems,
leading to noticeably cleaner air. But not all casinos can afford
to install the latest technology.
While there
are long-standing assumptions that a smoking ban would hurt the
casino industry, there is substantial evidence suggesting that smoking
bans do not hurt businesses - and over time, might help them.
The casino trade
publication Global Gaming Business will soon report a study it commissioned
that concluded that casinos might pick up more business than they
would lose if they banned smoking. In one poll, 31 percent of casino
customers questioned indicated they would visit casinos more often
if they were smoke-free, compared with 11 percent who said they
would patronize another casino that allowed smoking, according to
Global Gaming Business Editor Roger Gros.
"Most casino
executives realize that the horse has left the barn and they're
going to have to consider (a smoking ban) now or later," he
said.
Casino executives
have not needed to weigh in on the issue so far, because of successful
efforts over the years to fend off smoking restrictions.
Dozens of studies
indicate that the effect of smoking bans on bars and restaurants
in other states, while perhaps not as rosy as some anti-smoking
groups would submit, aren't nearly as doom-and-gloom as predicted.
Government-funded,
peer-reviewed studies by academics tend to conclude that smoking
bans have had a neutral to positive effect on business. Studies
funded by the tobacco industry or other business groups suggest
the opposite, by downplaying the potential increase in business
over time from nonsmoking customers.
Experts on both
sides of the debate say tax receipts are the most effective way
to analyze the economic effect of smoking bans.
Figures in California
and New York, the largest markets with smoking bans, suggest that
bans could hurt restaurant and bar business in the short term but
that business can improve in the long term.
According to
the New York State Department of Taxation and Finance, taxable sales
among bars and taverns statewide fell 3 percent in the first three
months of the 2003 smoking ban from the previous year and were relatively
flat over the next four quarters. Full-service restaurants averaged
3 percent to 4 percent increases in the four quarters following
the ban. Trends for New York City were similar.
The increases
occurred at a time when the city and state experienced rising retail
sales, while comparisons were made against a period in which New
York was still recovering from the residual effects of the Sept.
11, 2001, terrorist attacks.
The California
Department of Health Services, using state reports on taxable sales
from 1990 through 2002, found that the 1995 smoking ban in restaurants
was followed by an increase in revenue and the 1998 smoking ban
in bars was followed by increased bar revenue.
State statisticians
concluded that any loss of business from smokers was "more
than offset" by nonsmokers who had previously eschewed smoking
environments.
While it's possible
that the increases in revenue might have been larger had smoking
remained legal, researchers said that conclusion is unlikely because
they found significant increases in revenue even after controlling
for trends in entertainment spending in specific counties.
Gaming and tavern
interests say tax revenue information on bars and restaurants isn't
comparable to casinos.
"We don't
buy the premise that this is California or New York," said
Ron Drake, owner of the Point After Lounge in Las Vegas and a board
member of the Nevada Tavern Owners Association, which is backing
Question 4 along with slot route operators who own slots in grocery
and convenience stores. "This is a unique economy based on
gaming revenue. Smoking is very much a part of (gamblers') lives."
Casinos fear
what happened at Casino Windsor, which sits across the Canadian
border from three Detroit casinos. It laid off hundreds of people
and its revenues dropped about 20 percent in the early weeks of
an Ontario smoking ban that took effect in June. Border slowdowns
and a strong Canadian dollar also contributed to a decline in business
from Americans, some of whom were lost to the Detroit casinos.
Data from Delaware
suggest that casinos have been able to rebound from an initial drop
in business after smoking bans were enacted.
Gambling revenue
fell by about 10 percent in the year following a November 2002 smoking
ban in Delaware that included the state's racetrack casinos. Revenue
fell another 4 percent in the year following the ban. Since then
gaming revenue has increased gradually .
A 2005 study
conducted by researchers at the University of California, San Francisco
- the first government-funded report on the economic effect of smoking
bans in casinos - showed no correlation between the smoking ban
and a decline in business when controlling for factors such as the
economy and inflation.
Ed Sutor, chief
executive of the company that owns the Dover Downs hotel and casino
in Delaware, disputes that contention, but he said the ban ultimately
proved a good thing for his business.
Sutor says the
company's revenue effectively dropped by at least 20 percent given
that the company's revenue prior to the ban was growing at a clip
of about 10 percent from the previous year.
"It set
the company back by at least a year," he said. "We lost
all that growth."
Sutor said smoking
bans "will hurt - but you'll get over it."
The ban has
become a selling point for the property, which is attracting nonsmokers
as well as smokers who continue to smoke outside.
"Long term,
it's going to be good for the company," he said. "We don't
have to clean the place as much. We have domes with clouds on the
ceiling and the clouds were turning yellow. And it helps with health
benefits." |