Bottom line: Smoking in casinos costs too much By Mark Gruetze, CDC Gaming Reports February 26, 2022 at 12:15 pm The latest analysis of how a smoking ban would affect New Jersey casinos boils down to one bottom-line conclusion: “Casino management has found – based on their trove of internal analytics – that smokers have a higher value than non-smokers,” says the study by Spectrum Gaming Group. That’s strictly a dollars-and-cents value, of course, based on interviews with operators and proprietary revenue figures for the smoking and non-smoking areas of seven Atlantic City casinos. Casino-floor workers and other gamblers rightly argue that their health is worth at least as much as the few extra dollars that might – or might not – come from allowing carcinogenic secondhand smoke to permeate the premises. The Spectrum report, publicly released Feb. 23, comes amid a legislative effort to ban smoking throughout New Jersey casinos. Currently, smoking is allowed on 25 percent of a gaming floor, while it’s banned in casino restaurants, entertainment venues, meeting rooms, offices, and other areas. Spectrum did its independent analysis for the Casino Association of New Jersey, which represents Atlantic City’s seven casino operators and all nine of its casinos. The report forecasts a dismal picture of the New Jersey casino industry in the first year of a total gaming-floor smoking ban: less revenue from gaming and non-gaming outlets, reduced state gaming-tax receipts, and job losses compared to the pre-pandemic level of 2019, not current staffing. It’s the same doomsday argument casinos have made over and over in trying to keep a death grip on their status as one of the last public places where people can light up. Thousands of restaurants and other businesses made similar dire predictions, yet thrived after going smoke-free. The study notes that casino executives face “continuous, intense pressure” to generate the highest profits possible. In New Jersey, many cram more than 25 percent of their slot machines and table-game seats into the 25 percent of gaming floor space allotted for smoking. One manager told Spectrum that 43 percent of his casino’s slots were in the smoking section; another, apparently from a different operation, said half of the casino’s slot revenue came from the smoking section. A key takeaway from these revelations is that even though a smoking section is limited to a fourth of the total gaming floor in new New Jersey casinos, it is bound to produce far more than a fourth of total GGR. The revenue reflects a concentration of gamblers, not smokers. The analysis estimates 21 percent of the gamblers in Atlantic City casinos are smokers, which it says falls between higher figures from casino managers and lower figures from floor workers. The nationwide rate was 14 percent in 2019 and New Jersey’s rate was 13.5 percent in 2018, according to federal and state health agencies. The study assumes non-smokers are worth an extra 25 percent or 50 percent in “expenditure value.” The analysis refers to the 2008 Atlantic City Visitor Profile Study, which found that smokers gambled longer and lost more than non-smokers ($655 vs. $497) and spent more overall ($981 vs. $796). Other studies raise doubts about whether the 14-year-old statistics are valid. At the National Indian Gaming Association conference last year, casino executives and top industry analysts reported that smokers tended to be in the lowest tier of players and that many tribes saw “no economic impact” after banning smoking in their casinos. The Centers for Disease Control and Prevention says people with more disposable income are less likely to smoke. Among those earning between $75,000 and $100,000 a year, the smoking rate is 11.4 percent; above $100,000, it’s 7.1 percent. Spectrum’s analysis doesn’t forecast beyond the first year. Typically, casinos that have had an initial revenue drop after the switch to non-smoking enjoy a rebound in the second year. New Jersey could look next door to Pennsylvania for a real-time lesson about the fate of non-smoking casinos. After Pennsylvania casinos reopened from COVID closures in 2019, smoking on gaming floors was prohibited because of a mask mandate that continued until June 28, 2021. Parx Casino in suburban Philadelphia and Mount Airy Casino in the Pocono Mountains stayed smoke-free voluntarily. Both saw their on-premises gross gaming revenue for calendar year 2021 increase over the record-setting 2019. The increase came despite six months of pandemic restrictions that included no alcohol service on the gaming floor and reduced capacity, in addition to the mask mandate/smoking ban. Parx was the state’s top gaming revenue producer both years. Nationwide, the American Nonsmokers’ Rights Foundation says 1,036 U.S. casinos and other gaming properties have smoke-free indoor air policies, including 157 tribal facilities that voluntarily banned smoking. Spectrum acknowledged the narrow focus of its report. “It is beyond the scope of this study to consider other impacts or issues that may be associated with smoking or a smoking ban,” it says. “Further, Spectrum offers no opinion or recommendation (on) whether smoking should be allowed on casino floors.” Those other issues include protecting the health of workers and customers, reduced cleaning costs, fewer employee sick days, and lower health-insurance costs. The bottom line should be clear: For public health and the casinos themselves, New Jersey and other states can’t afford smoking on the gaming floor.