3/15/2007

No Smoking...In Casinos?

An article in USA Today talks about the ban on smoking in Atlantic City, the second biggest gambling city in the United States which brought in $5.2 billion in revenue in 2006. New Jersey has previously outlawed smoking in all bars, restaurants and other working places. Beginning in April, smoking will only be allowed in a designated 25% of the gambling floors and proposals are currently underway to outlaw smoking altogether in New Jersey casinos. Colorado, Rhode Island, Pennsylvania, Illinois and Lake Tahoe are not far behind New Jersey in putting bans on smoking. Many are arguing that this ban on smoking will hurt these casinos profitability and make them unable to compete against casinos in other areas that permit smoking. I personally don't think that it will hurt business that much, in fact from other information I've looked at banning smoking has actually increased business. Maybe some avid smoking activists will travel to other destinations that allow smoking, but how many new non-smokers will come out to the gambling floor because they won't have to worry about that constant overhead cloud of smoke and go home smelling like a bar? As long as there are designated smoking areas, even if outside, I think the casinos will be economically better off and a much better environment.

10 comments:

joseph said...

I agree. In the Netherlands we have seen a similar trend where you are no longer allowed to smoke in some restaurants, bars, etc. In my opinion this doesn't hurt business at all. It actually helps it. There are fewer smokers than non-smokers and most people that don't smoke hate the smell and bad air that smoking causes. I think more people enjoy non-smoking areas than people disliking them, so there is an overall benefit.

bend said...

Profits will go down. I don't like to smoke and I hate to be around people that smoke, but the people that do smoke are more likely to go to casinos. One has to look at who the target market is here and who is it that goes to casinos. Many people in my opinion go to the casino to relax, drink and smoke. If it is forbidden, then they will find a different hobby where they can smoke

Sebastian said...

I’m a little mixed on this one. I can see how banning smoking may definitely cause some customers to go elsewhere. However, I can also see how it may bring in new customers. Like Bend stated, “One has to look at who the target market is”. I know that in Las Vegas, each casino is set up very differently. It may not seem like it, but they each have determined who their target market is and they adapt to it. I would think that by doing some research, a casino would be able to determine approximately what the outcome would be. Another item to consider would be the smoke damage done to casinos. If smoking were banned, the building would probably be worth a lot more.

Jada said...

I agree with Joseph in that there are more nonsmokers then there are smokers. How many nonsmokers have stayed away from casinos because of the thick choking cloud of smoke that gets in your eyes, your hair, and on your clothes? It will be interesting to see the end of year fiscal reports. If there is an increase in profits then Las Vegas may need to reassess who their target market is and advertise to a new demographic market.

Dr. Tufte said...

Second-hand smoke is a bizarre issue. There is an urban myth that this is a health hazard, but there is little or no support for this. So we are mostly talking about aesthetics.

Previously, casinos didn't offer a differentiated product: there was one big room where you either smoked or not. It seems unusual that they didn't create smoking and smoke-free areas on their own (perhaps they did, I do recall being in a casino in Mississippi in 1992 that had this arrangement).

The bottom line is that profit-maximizing companies did not choose to ban smoking or differentiate their product. We may not believe the evidence, but they are sending a pretty strong message there that this is not an issue that affects demand very much.

Enter legislatures full of control freaks. Not content with letting the evidence speak for itself, they are forcing their viewpoint on others. This can't be good.

FWIW: I'm a non-smoker with allergies from a family of non-smokers, so if anything I'm biased towards smoke-free.

Matthew said...

3/15/07 No Smoking...In Casinos
Dr. Tufte said: “The bottom line is that profit-maximizing companies did not choose to ban smoking or differentiate their product. We may not believe the evidence, but they are sending a pretty strong message there that this is not an issue that affects demand very much.”

This is so true! The less business regulation, the better. If people don't want to be around smokers they won't go to those casinos. Other casinos, if they find it to be profitable, will fill the need for non-smoking casinos. If the people really demand non-smoking casinos, then smoking casinos will start to be unprofitable and they will switch to non-smoking. I think that public places, like public libraries and parks should be smoke-free, but no one is forcing a person to step inside a casino.

Isaac said...

The previous posts in my opinion are all valid. The casino needs to take into account the customers that you would both lose and gain, time and money spent on research, and overall implementation of policy. Then, in order to maximize profit, they should study whether having a smoke-free environment would be better to their bottom line. I believe it would be best to try and please both markets by banning smoking but including “smoking rooms” close by.

William said...

Dr. Tufte,
I just overheard some people the other day talking about how they went to a smoke-free casino and how nice it was for them. They commented on the clean air and not getting the headaches that they usually get. They also mentioned that it was at full capacity. It seemed from their conversation that the casino was doing well and that they in fact enjoyed their visit more than a smoke filled casino.

I think there is a demand for a casino that is smoke free. I know that I personally would rather go to a casino that is smoke free then one that allows smoking.

Trinity said...

Dr. Tufte- I would have to disagree. I read a few articles on the affect of revenues after states pass bans on casino smoking. Illinios in particular saw a steep decline from the previous year. Tom Swoik, executive director of Illinois Gaming Association, attributed the lost revenues to the smoking ban. Smokers must go outside while they smoke, which means less time on at the machines, which means less revenues. Just some food for thought.

Dr. Tufte said...

Trinity: Illinois isn't a great example, because they do have substitutes close at hand.

I think there is a demand for this sort of thing, I just don't think that management is dumb enough to avoid not trying to satisfy it. Requiring this sort of thing just seems like the government being a busy-body.