There is a big debate in Atlantic City right now. Many employees are fighting for a smoking ban at the city’s casinos. These are among the last businesses in New Jersey where indoor smoking is permitted.
One proposal suggests using outdoor smoking rooms with gaming. This compromise worked in other states. I wrote about the outdoor smoking rooms in Maryland and Ohio earlier this week. The difference is that these two states opened after statewide smoking bans already existed. Atlantic City casinos opened decades before a statewide ban was created.
A recent Associated Press article notes that it would be expensive to create smoking rooms like the ones in these other states. The expense could be more than some of these casinos win at slots and tables in a month or more.
There is no debate that indoor smoking is a health hazard. There is also evidence that smoking bans can have disastrous effects on gaming revenues. This has been the debate since smoking bans started in the 1990’s.
Casino smoking bans have been popular since the pandemic started
The late 2010’s saw few casino smoking bans created. Most of the ones on the books now became law in the 2000’s or earlier in the 2010’s. The pandemic brought the debate back.
An estimated 160 tribal casinos went nonsmoking after the pandemic started. All did this voluntarily as state smoking bans do not apply to sovereign tribal land. Several other jurisdictions went temporarily nonsmoking. This includes Detroit casinos, which are exempted from a smoking ban under state law. These properties continue to be smoke-free.
Many other states permit casino smoking, even when banned at bars
In 2019, I wrote an article detailing casino smoking bans. At the time, there were 15 states with commercial casinos and/or video lottery that permitted indoor smoking at these establishments.
Those states are Arkansas, Georgia, Indiana, Iowa, Kansas, Louisiana, Michigan, Mississippi, Missouri, Nevada, New Jersey, New Mexico, Pennsylvania, Rhode Island, and West Virginia. Of those, Iowa, Kansas, Michigan, New Jersey, New Mexico and Rhode Island banned smoking at bars and gave casinos a special exemption not given to any other business outside of the tobacco industry.
Since that article was published, casinos have opened in Virginia. Smoking is permitted at Virginia casinos, bringing the total of states that allow smoking at gaming establishments to 16.
Bingo halls and off-track betting parlors have exemptions in those states, as well as in Alabama, Idaho, Kentucky, Maine, North Carolina, Oklahoma, South Carolina, Tennessee, and Wyoming. This does not include the hundreds of casinos in states like Arizona, California, Florida, Minnesota, Montana, Oregon, Oklahoma, North Dakota, South Dakota, Washington, and Wyoming where casino smoking is permitted based on tribal policy, not state law.
Overwhelming evidence that casinos lose revenues after smoking bans pass
There is no argument that workplaces are safer when there is no smoke. The same might be said about what happens to gaming revenues and the taxes and jobs it generates.
A 2010 study by the Federal Reserve noted that the Illinois smoking ban devastated gaming revenues. Illinois casinos never recovered from that move. Smoking was banned in Illinois casinos on January 1, 2008. In 2007, Illinois casinos set a record with $1.98 billion in combined gaming revenues. It was not an outlier. The 2007 numbers barely beat the $1.92 billion recorded in 2006.
That record still stands. No other year has come within $350 million of 2007.
In 2019, the last year reported before the pandemic, gaming revenues were down 32% from the 2007 peak. While video lottery is responsible for some of that decline, the years those devices have been in service do not entirely overlap the drop in Illinois casino revenue. The Federal Reserve report cited reasons why it believes much of the lost revenue went to neighboring states where smoking is permitted.
The Montana video lottery is another example of gaming never recovering after a smoking ban. These machines won $422 million in 2008. That record still stands today. It is no coincidence that Montana’s smoking ban for video lottery establishments went into effect in 2009. Video lottery revenues dropped 16% after that policy change, and never fully recovered.
South Dakota and Colorado had the same experience banning smoking. Revenues immediately tanked. These states eventually recovered, but it required raising bet limits and adding games like roulette and craps to the mix.
The Park MGM non smoking experiment in Las Vegas is probably a tell
Park MGM reopened in 2020 as the only nonsmoking full-service casino in Las Vegas. It has the smallest casino floor of all Las Vegas MGM Resorts properties.
The company no longer reports gaming revenues by property, so it is impossible to know the exact results of the property after this change. However, it does not seem as busy as it once was during any of our visits. Common sense dictates that if this was a successful idea, MGM Resorts would have expanded it to other Las Vegas properties. It has not done that, and no other company in Las Vegas has tried it since.
Mount Airy Casino in Pennsylvania was voluntarily nonsmoking up until the last few months. It decided to bring smoking back to 50 percent of its casino floor. That is the amount permitted under Pennsylvania’s smoking ban. Parx and Rivers Philadelphia remain voluntarily nonsmoking. Smoking is permitted at Rivers Pittsburgh, showing that the company’s policy is based on the market’s demand, not a blanket policy.
Atlantic City nonsmoking policies have twice failed
Atlantic City had its own failed experiments with smoking bans. The city council passed one in 2008 that would have put an end to casino smoking in New Jersey. It was repealed right as it was to go into effect as nearly half of Atlantic City casinos noted that the decline in business could put them out of business.
Revel opened as a nonsmoking casino in 2012. That did not last long. It started allowing smoking around its first anniversary. It was too little, too late. Revel had so many problems in addition to this policy that it could not continue to operate. It shuttered in 2014. It reopened as Ocean Resort in 2018.
If Atlantic City goes smoke-free, it may decide to allow the types of outdoor gaming areas found in Maryland and Ohio. It may not need to though. There are legal online casinos and poker sites in New Jersey. These are available to anybody that is at least 21 years old and inside the New Jersey state line at the time of action. People that want to smoke and play casino games in their homes may do so.
Another gaming option is Atlantic City poker rooms. These are all smoke-free.
Most Pennsylvania casinos will continue to permit smoking. This would give smokers a choice in where they would like to play if they prefer live games, assuming Atlantic City bans smoking before Pennsylvania does. That feels like a massive favorite.