New Jersey legislation that would ban smoking in Atlantic City casinos has led to competing research into whether such action by state lawmakers would further destroy Boardwalk’s gambling revenue.
The heated debate has been largely ignored in Nevada, where only two casinos are smoke-free and any mention of a smoking ban is met with stiff resistance.
More than 20 states have banned or restricted smoking inside casinos. Several states that have legalized casinos in the past two decades, such as Maryland, have launched smoke-free casino rooms. Many states, including Pennsylvania, have restricted smoking in 2020 as part of reopening plans in accordance with COVID-19 health and safety guidelines.
Chad Beynon, gaming analyst at Macquarie Securities, said fear of lost revenue is hanging over Nevada casino operators, even as other states continue to implement laws that restrict smoking in public areas.
“I guess every state has to move closer to that inevitability, but given that the industry is the biggest employer of jobs in Nevada, there seems to be a pretty strong fight against that,” Beynon said. “I don’t think the Strip would have that big of an impact, but in some of the older demographic local markets, I guess it could be pretty big.”
Gaming consultant Andrew Klebanow, along with two colleagues from C3 Gaming, have written a research report that indicates gamers haven’t changed their habits since the pandemic, even when smoking has been stopped.
The report notes that after the temporary shutdown of the casino industry in 2020, around 157 Indian casinos across the country have reopened as non-smoking properties.
The authors suggested that casino patrons were accepting changes in many areas of the resort industry during COVID, such as the end of daily room service and the closing of buffets.
“Customers readily understood that mask mandates were inconsistent with smoking and accepted the ban,” the authors wrote. “What was surprising was that even after mask mandates were lifted and smoking bans remained, customers collectively accepted it. After successfully eliminating smoking from their buildings at no economic cost, tribal casino operators have resisted the temptation to reintroduce smoking to their properties.
Atlantic City casino operators are skeptical. The market, which hit $5.2 billion in gaming revenue in 2006, has been in freefall for 16 years, hitting a low of $2.56 billion in 2015. Last year, Atlantic City brought in $4.7 billion in gambling revenue, but more than $1.36 billion came from regulated New Jersey internet casino sites.
Last week, Americans for Nonsmokers’ Rights, which advocates for smoke-free legislation in New Jersey, touted C3 Gaming’s study and also said the legislation has the support of more than half of the state legislators.
The organization came to Las Vegas last year to advocate for a similar ban at Strip resorts.
“We’re trying to build a grassroots effort here,” Cynthia Hallett, CEO of Americans for Nonsmokers Rights, said at the time. “We know it’s a battle and we’re pushing that big rock up the hill. But we don’t believe this hill is so steep anymore.
But Klebenow, who is based in Las Vegas and has 40 years of experience in the casino industry, predicted that Nevada would be the last state to ban smoking in casinos.
“Individual states that don’t depend on gambling tax revenue for the lion’s share of their budgets will gradually close their smoking loopholes,” Klebanow said in an interview. “Eastern states will rock first, then maybe Midwestern states. If there is a dramatic resurgence of the pandemic, then some Indian casinos will follow suit. The second-to-last state to return will likely be Mississippi. Nevada will be the last dead.
Avoid the subject
The voter-approved Nevada Clean Indoor Air Act went into effect in December 2006 and bans smoking in most indoor public places and businesses, with the exception of casinos.
State lawmakers approved changes to several sections of the law during the 2011 legislative session, including allowing patrons to smoke inside bars, taverns and saloons that do not allow customers under the age of 21. During the 2019 legislative session, the law was updated to include vaping products or e-cigarettes.
When pandemic-related health and safety operating guidelines for casinos were implemented by the Gaming Control Board after the state’s 78-day gaming shutdown, patrons could not remove masks facials than for eating, drinking and smoking.
MGM Resorts International prohibits smoking inside all areas of Park MGM on the Strip when business reopened the station in September 2020. The ban remains in place and Park MGM is the only smoke-free casino on the Strip.
The Fernley Nugget in Lyon County is Nevada’s only other voluntary smoke-free casino.
A spokesperson for MGM Resorts declined to comment on how the park’s policy has been accepted by guests and whether the company plans to ban smoking at any of its other nine hotel-casinos on the Strip.
Most casino company officials contacted for this story declined to comment on the smoking bans. Station Casinos spokesman Michael Britt said the company offers “non-smoking gaming areas at all of our properties.” Other gaming officials have noted that poker rooms in Las Vegas are mostly smoke-free, including large poker rooms at Strip resorts and the temporary World Series of Poker space inside. Bally’s Las Vegas.
Nevada Resort Association President Virginia Valentine said her member casino hotels have “invested heavily” in new technology that circulates fresh air and clears smoke from casino floors.
“From specialized ventilation and filtration systems to air handling units located at tabletop games and the bases of gaming devices, the industry continues to utilize the latest innovations to benefit employees and guests,” said declared Valentine.
She added that most casinos in Nevada’s largest casino markets “respond to the diversity of our customers’ preferences by offering smoke-free and smoking environments.” Valentine said casinos monitor any changes in customer preferences.
“Our members continuously assess consumer demand to inform their business practices,” Valentine said.
A smoking ban inside Nevada casinos would have at least one vocal supporter – Culinary Workers Union Local 226, which has more than 60,000 members who work in non-gaming areas in Strip and downtown resorts -town.
Culinary Secretary-Treasurer Ted Pappageorge said in a statement that the union will survey hospitality workers to gauge their interest in smoke-free casinos. He said the union “welcomes” the news of Park MGM becoming a completely smoke-free casino.
“It’s been long overdue for a completely smoke-free casino in Las Vegas, and Union Culinaire is totally supportive,” Pappageorge said.
Boardwalk casino operators oppose ban
The C3 Gaming report predicted that smokers would not flee Atlantic City casinos if smoking was eliminated. Smoking bans are in place in Connecticut and New York, and a smoke-free policy has been implemented at Rivers Casino in Philadelphia. Only four Pennsylvania casinos currently allow smoking.
“Only the most progressive casino operators have the ability to rethink the smoking model,” Klebanow said. “A casino could adopt a no-smoking policy and back it up with a really innovative smoking lounge. Imagine a comfortable room adjacent to the casino with a separate ventilation system, comfortable seating and other amenities where players could take a break.
New Jersey’s legislation is supported by casino employees and the governor.
But Atlantic City’s casino operators aren’t convinced. Under current laws, only 25% of casino floor space can allow smoking, which casino operators say is the most lucrative floor space on a property.
“My roulette, blackjack and slot machine in the smoking sections pay out 50% more than my non-smoking games,” said Hard Rock Atlantic City President Joe Lupo. CNBC. “That’s a fact.”
Atlantic City casino operators also cite two other research reports on the smoking problem from casino industry consultant Spectrum Gaming and CBRE gaming analyst John DeCree.
Spectrum argued in a report commissioned by the Casino Association of New Jersey that a total smoking ban could cause gaming revenue to decline between 4.2% and 10.9% annually, and non-gaming revenue to decline by between 3 % and 6.5%. In total, that means New Jersey could lose nearly $25.7 million in annual tax revenue.
DeCree, meanwhile, estimated that Atlantic City casinos could see their gambling revenue drop by up to 25%.
Both studies looked at smoking bans that were implemented in other states and local markets in the early to mid-2010s and before the pandemic, including Illinois, Delaware, New Orleans, and New Orleans. West Virginia. DeCree noted that Atlantic City has been the only indoor smoking option for entertainment in New Jersey since a statewide ban took effect in 2006.
“We wouldn’t be surprised if the impact in Atlantic City was greater or even greater than indicated by some of these case studies for a variety of reasons,” DeCree wrote in the report. “Atlantic City casinos have likely exceeded their share of discretionary entertainment among the smoking population over the past 15+ years. Atlantic City needs to steer its customers away from more conveniently located gambling options and the absence of smoking would leave many of its higher value smoking customers with no reason to make the trip.
Klebanow criticized the Spectrum and CBRE studies because the markets used for comparison purposes had other economic conditions and issues before the smoking bans that contributed to declining gaming revenue.
Valentine said the C3 Gaming report “advocates government intervention to dictate business decisions rather than consumer choice. Additionally, it uses selective and subjective feedback from other gambling markets, which are incomparable to Nevada’s unique tourist environment, to support its flawed assumptions.”