Illinois casino officials are disputing a report in the journal Tobacco Control indicating a 2008 smoking ban had no negative impact on revenue. The casino officials said they disagree with the study’s methods and claim revenue definitely has decreased.
The lead study author, Dr. John Tauras of the National Bureau of Economic Research and the University of Illinois in Chicago, said, “Estimates from our study clearly indicated that the Illinois law that banned smoking in casinos has had no significant negative economic consequences for casinos in terms of per-capita admissions or revenues.”
The Smoke-Free Illinois Act banned smoking inside and within 15 feet of casino building entrances. It took effect one month after the nationwide recession began. The Tauras study analyzed casino admissions and revenue for 10 years before and eight years after the law was implemented. Besides Illinois, the study reviewed figures for Indiana, Iowa and Missouri, with per-capita adjustments based on population.
The study found the law did not have a statistically significant impact on per-capita casino admissions and revenue. In general, Illinois casino admissions reached a peak in July 2000 and have been trending downward ever since. At first, the before-and-after comparisons showed a 5 percent drop in casino admissions in Illinois, compared to increases in admissions in Indiana, Iowa and Missouri after the ban began.
However, more in-depth analysis showed per-capita gross receipts dropped 20 percent in Illinois from the first quarter of 2007 to the first quarter of 2008, compared to declines of 11 percent in Indiana and 5.6 percent in Missouri and slight increase in Iowa. At the same time, after studying other factors like the economic recession and the start of electronic video gambling, researchers determined the smoking ban had no effect on casino numbers.
Illinois Casino Gambling Association Executive Director Tom Swoik said state casino officials disagree with those findings. He said the way the study calculated admissions and revenues may account for the discrepancy in numbers. Per-capita and state-wide numbers may indicate the smoking ban has not made a difference.
Swoik noted a 2009 report by the Federal Reserve Bank of St. Louis said the ban could be responsible for a 20 percent revenue decline, or more than $400 million in lost revenue and more than $200 million in tax revenue for Illinois in 2008. “We do know from other studies that the more time someone spends on the casino floor, they more likely they are to keep playing. If they have to go outside to smoke, they’re more likely to light up and then leave,” he said.
Swoik added, “We know that secondhand smoke is not beneficial to your health, and at the same time, having a facility where people can smoke at a casino is beneficial for revenue. It can be hard to weigh the negative health effects versus the economic numbers.”
The study authors said future studies should investigate potential effects of smoking at Native American casinos. Smoking is allowed at about 75 percent of the nation’s 485 tribal casinos. “Many tribes rely on casinos as a significant source of revenue, and they’re reluctant to adopt smoke-free casino policies because they fear their revenues will decline,” Tauras said.
