It has taken Las Vegas a couple of years to steadily recover from the recession. Finally after thousands of home foreclosures and thousands of people who found themselves jobless, the economy in Las Vegas has bounced back.
But the days of playing craps, blackjack, baccarat or slot machines in a smoke-filled casino on the famed Las Vegas Strip might soon be a thing of the past, and that idea has Las Vegas officials, economist and the gaming industry in the Silver State on edge.
The seeds of banning smoking throughout the casinos were planted in 2006 when Nevada voters approved a proposal to ban smoking in public areas, except on casino floors.
Now, if what is taking place in Macau is any indication, the idea of lighting up while sitting in a sportsbook or “rolling the bones” or playing video poker will be a distant memory. Analysts predict the next 24 months will be worth watching to see if Nevada joins nearly 20 other states that have passed laws that ban smoking throughout casinos.
A ban on smoking in casinos could very well put the brakes on Nevada’s recovery.
Big changes in Macau
Three of the world’s leading casino developers have invested billions of dollars in the Macau market. By 2016, Wynn Resorts, MGM Resorts and Las Vegas Sands Corp. will be opening new properties to accommodate the fastest growing gambling sector in the world.
In 2013, gaming revenue in Macau topped $45 billion and there does not appear to be any signs of a slowdown in the gaming industry in what is often referred to as the “Monte Carlo of the Orient.” With more than 30 casinos in operation, the Macau market has room for significant growth in the next 24 months. Gaming revenue for the first six months of 2014 is up more than 12 percent from 2013.
Each casino conglomerate that is building toward the future has shown a willingness to outlaw smoking on their casino floors. A ban goes into effect in Macau in October and Nevada officials are close watching the outcome; if a smoking ban does not have an adverse effect on Macau gaming revenue, Nevada might follow suit.
Smoking ban in Nevada
What happens in Macau will affect Nevada casinos and how the big three gaming giants perceive what should be done. Some believe it will be at least two years before a smoking ban can be effectively implemented on the Strip. Voters will have to approve a ban, and many believe that is just a formality.
Despite the warning, there has yet to be any steps taken to drum up support to change the laws.
Deutsche Bank gaming analyst Andrew Zarnett told the Las Vegas Review-Journal there has yet to be a “groundswell of support” from lawmakers or state gaming officials to outlaw smoking.
Zarnett did say that ongoing studies of smoking’s dangers eventually will put pressure on Nevada officials to at least consider a ban that could cost the state revenue in the end
If Nevada was to institute a ban, it could result in a 7.5 percent decrease in gaming revenue in the first 12 months. Zarnett cited two instances where previous bans resulted in “steep declines” in gaming revenue. And one of those that Zarnett mentioned hit close to home for Nevadans.
When Nevada voters banned smoking in bars and restaurants, the ramifications resulted in Herbst Gaming filing for bankruptcy in 2010. Herbst, Nevada’s largest slot machine route operator witnessed a 20 percent decrease in business, which Zarnett said was partially the result of the smoking ban.
After a couple of years of outcry and debate about the negative impact the 2006 ban had on businesses throughout Nevada, the law was altered to permit smoking in bars where food as well as booze was served with one caveat: these establishment had to be places were minors were not allowed.
Figures in two of the 18 states where smoking is outlawed in casinos corroborate gaming industry experts’ fears that a ban will be detrimental to business.
Gaming revenue in Illinois plummeted almost 21 percent after a smoke-free law was passed in 2007. Five years earlier, Delaware suffered through an 11 percent decrease after a similar law was approved by voters.
Smoking ban effects
Most casino operators loathe the idea of making gamblers leave a table or slot machine to go outside and gamble.
Gamblers are superstitious by nature and follow specific patterns in how they gamble. And if they have been losing and step outside to smoke, they just might decide they’ve had enough and go to another casino, or worse, go back to their hotel room or home.
At the same time, if they have been winning, they might decide to do the same — leave.
The point being made by gaming experts who have studied smoking bans is that forcing people to leave the comfort of their machine or table is only giving the gambler a reason to take their money and spend it elsewhere.
Macau casinos will offer smoking rooms on the casino floors to offer smokers an alternative. Even though only table games will be allowed to be played in these rooms, casino operators are banking that a room with its own ventilation and heating systems will be enough to prevent a significant decrease in gaming.
Some Strip casinos already have taken a proactive approach to a total smoking ban. Some race and sportsbooks have doused smoking. Fans and players of the fast-growing game of poker have seen most poker rooms go smoke-free.
Gamblers do have specific nonsmoking areas to play slots, video poker and table games.
And casinos have spent millions of dollars installing the best state-of-the-art ventilation systems.
But will these steps be enough to stave off a complete ban on smoking?
All eyes will be on Macau come October. Many believe it’s just a matter of time until Nevada voters go to the polls and decide to do away with smoking totally on the casino floor.