Smoking ban may suffocate casinos

By Jonathan Jacobson

As of Thursday evening, there are 88 days and six hours until the Illinois statewide smoking ban goes into effect, according to the Smoke Free Illinois Web site. And as with the recently eliminated smoking ban in Champaign or in other communities, there are some businesses up in arms about the effect the blanket ban will have on their ability to generate money.

This is especially true with Illinois’ nine casinos, which generate nearly $1 billion a year for the state, about $630 million of which goes directly to fund education, according to the Illinois Casino Gaming Association.

Tom Swoik, executive director of the association, said Illinois is looking at a loss of “$144 million a year, and to local governments of about $20 million a year.”

Swoik cites an informal survey that determined 60 percent of the customer base at one Illinois casino to be smokers. At a Rock Island casino he estimated that the number is closer to 70 percent.

But these data are directly contradicted by a recent American Lung Association study that estimated the percentage of smokers in Illinois casinos to be closer to 6 or 7 percent.

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    How, then, does Kathy Drea, director of the Smoke-Free Illinois Project and director of public policy for the American Lung Association of Illinois, reconcile the study’s data with Swoik’s?

    “They dreamed it up somewhere,” she said.

    Drea said she believes that the casinos do not stand to lose much revenue as a result of the ban, and that many new nonsmokers will be drawn to the possibility of coming home from an evening of gambling without having to immediately wash their clothes.

    The casinos “may see a slight decrease in the beginning, and that’s just a guess, but the fact of the matter is 80 percent of the population are nonsmokers,” Drea said.

    An amendment failed to pass through the Legislature that would have allowed an exemption to the smoking ban for the casinos. One of its sponsors, Sen. James Clayborne, D-Belleville, said he thinks the ban is bad news for casinos, especially East St. Louis’ Casino Queen, which is only a river away from a state without a smoking ban.

    “The Casino Queen provides half of the general revenue fund for the city of East St. Louis,” Clayborne said. “Just across the river, they are building a billion dollar hotel and casino. And guess what they don’t have over there?”

    East St. Louis, which Clayborne said is listed under the Illinois Distressed Cities Act as “financially distressed,” is not dissimilar to the towns where the other eight casinos in Illinois have been built. Their purpose was to help revitalize ailing towns, and the bustling casinos have thus far been up to the task.

    Par-A-Dice Casino, located in East Peoria, generated $46.2 million in state revenue in 2005. Using Swoik’s formula of an estimated 20 percent loss, the state could lose $9.2 million from Par-A-Dice alone.

    “It is very likely Illinois casinos will experience revenue loss,” said Rob Stillwell, vice president of communications at Par-A-Dice. He pointed to the cases of Delaware, Ontario, and New Jersey, all of which, he said, experienced revenue decline after statewide smoking bans went into effect.

    The casino in Ontario, a province in southeastern Canada, laid off 300 employees and had a 20 percent revenue loss. Swoik points to events like these as warning flares for what’s to come.

    But Drea notes a recent study conducted by the Springfield Journal-Register which found that one year after a citywide smoking ban, revenue actually increased in bars and restaurants.

    This debate is especially poignant 30 miles away from Champaign-Urbana in Danville, said the cities’ representative, Sen. Mike Frerichs, D-Gifford.

    A casino expansion bill, which would directly fund the state’s capital budget, could place a casino in Danville.

    Frerichs, who voted against the statewide smoking ban, said he believes it is possible that the state would lose some revenue as a result of the ban, but added that exempting casinos is not a good idea.

    “If you exempt it for casinos, then you’re going to have bars come in and say, ‘Hey, we want to be exempted, too,'” Frerichs said.

    Danville is also a captive audience, he said, as “there is not another casino within 100 miles.”

    Clayborne’s district, though, doesn’t have the same breathing room.

    “The Casino Queen probably competes against more boats in the proximity of 20-30 miles than any other casino in Illinois,” he said. “To come in now and place that business at a competitive disadvantage with the neighboring state means the city of East St. Louis will potentially have to cut back on their services to the community.”

    Drea, though, said she believes the casinos, like other businesses in the state, will recover should they initially lose business.

    “There will be the people who say, ‘I’m never coming back,’ but then they eventually do,” she said.

    Even if that is the case, Swoik said the state is sending mixed messages to the casinos.

    “It doesn’t make a lot of sense,” he said. “They’re trying to increase revenues in casinos, and at the same time they’re cutting back on smoking.”