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September 23, 2014

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Casino fight goes up in smoke

After years of actively opposing smoking bans, the casino industry's primary lobbying organization is backing off as a wave of states pass indoor smoking prohibitions that include casinos.

Since the mid-1990s, the American Gaming Association has pushed for national building code standards accommodating tobacco smoke, arguing that prohibiting smoking would be bad for business.

But fighting smoking bans "is an uphill battle," says Judy Patterson, executive director of the American Gaming Association.

Even states that exempted casinos from no-smoking laws, such as Colorado and New Jersey, reconsidered those exemptions the following year, she notes.

Lobbying against smoking bans at a national level has become nearly impossible for the association, she said.

"All the momentum is with the health groups," Patterson said. "This became one of those issues that could not be handled industrywide."

Some of the association's individual casino members are softening their positions against smoking bans, saying they would support a nationwide, federal ban - especially if it included tribal casinos. With such a blanket prohibition, the logic goes, no one casino could benefit by allowing smoking - and drawing smokers from a non smoking casino.

The American Gaming Association was among just a few business trade organizations that opposed a short-lived proposal in the 1990s by the Occupational Health and Safety Administration to completely ban smoking in the workplace.

The association, courted by the tobacco industry, is one of a dwindling number of smoking ban opponents. Even restaurant and bar associations, many of whose members already operate under anti-smoking laws, have muted their opposition to smoking bans.

Colorado is moving to specifically ban smoking in casinos, while Illinois is expected to become the biggest non tribal casino state to approve a total smoking ban. In Atlantic City, a new law bans smoking in 75 percent of a casino.

Historically, the gaming association hasn't lobbied at the state level for fear of taking sides among competing members. While most casinos oppose smoking bans in principle, a casino company operating in one state, for instance, might favor a smoking ban in a neighboring state where a competitor is located, to pick up its smoking customers.

The association hasn't lobbied for a national smoking ban because not all members want it, Patterson said. The Bush administration would likely oppose it anyway, while health groups - having more success with local ordinances - worry that federal rules could preempt more stringent local laws, she said .

A significant blow to the association's efforts to allow casino smoking occurred in 2005 when a national advisory group that sets air-ventilation standards concluded that no filtration system can effectively remove the health risks associated with second-hand smoke.

Few casinos have voluntarily banned smoking. The newest casinos are installing more effective - and costly - ventilation systems to minimize complaints about smokers.

One of those systems attempts to contain wafting cigarette smoke by creating curtains of streaming air. It's one of the systems being considered by several casinos, including the centerpiece resort at MGM Mirage's $7.4 billion CityCenter in Las Vegas.

Health advocates say the association's shifting stance is the clearest sign yet that casinos, a last bastion for smokers, are beginning to cut their losses.

"The casinos have realized they are on the losing side of this, that the claims of economic disaster aren't true and that they don't want to be burning up chips on this issue because it could hurt them on other issues that are more important to them," said Stanton Glantz, a professor of medicine and director of the Center for Tobacco Control Research and Education at University of California, San Francisco.

While studies in several states have shown that smoking bans don't hurt business over the long term, casinos and many industry watchers say bans - at least in the short term, which is all the evidence available - keep gamblers from their games or prompt them to gamble where smoking is legal.

"I think it is very clear that smoking bans in the short term negatively impact play," Deutsche Bank bond analyst Andrew Zarnett said. "But long term it won't impact business because we believe that most of American society will be nonsmoking, the playing field will become level again and casinos will learn how to accommodate smokers. It may be adding outside areas that have heating lamps and benches instead of having to walk outside the casino, walk into a corner and stand behind a pole."

Adam Steinberg, a stock analyst with Morgan Joseph, said the industry's stance on smoking is changing as their customers' attitudes change.

"For the first time, more than half of the population is living in a place where smoking is banned," Steinberg said. "This is something smokers are getting used to. Initially it was having an impact (on business) but as you have more businesses going smoke-free, it's not as much of a deterrent as it was before. It certainly didn't kill the airline industry."

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