by Steve Norton
CEO, Norton Management

Macau casinos can keep smoking lounges, lose VIP exemption - CalvinAyre.com

My comment:

Fortunately the Macao gaming growth from the new hotel room capacity, and the increase in overnight visitor stays, could offset the negative impact from the ban on smoking in casino rooms. Some premium players will switch to another casino jurisdiction, and others will spend less times at the games, because of their smoke breaks.

In both cases this means less gambling revenues, taxes and jobs; hopefully offset by continued growth in visitors. In Illinois' experience, their Chicago-area casinos had a gaming option a few miles away in Indiana, where smoking was permitted in some casino rooms. The four casinos in IL lost 20 percent of their annual win, with 14 percent fewer customers, and lost 9 percent more as smokers took a break to light up a cigarette. After three years the win was down 35 percent, and the win per visitor 14 percent less.

But because of the variable tax rate, during that three years the casino tax revenues were down 46 percent. Perhaps the bigger Macao casinos, should keep track of average win per customer in the high limit rooms, to get the true impact of having to leave the tables to have a smoke.

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My comment:

The ban on smoking keeps rearing it's ugly head in Macao, as employee groups keep complaining. But we must consider how many customers smoke, especially Chinese Nationals; so it is important for the health of the casino industry to make the right decision; whether to outlaw or find other ways to protect non-smokers.

I am a non smoker and prefer to visit establishments that have no smoking areas, but I don't see the need to stop a legal pursuit for persons over 18 years of age. I also agree that non-smoking employees should not be required to experience second hand smoke. But by only allowing smoking employees to work the smoking sections, we eliminate that concern. Although, I expect the next union complaints would come on behalf of non smoking employees, who earned higher tips, when working the high limit rooms, where smoking is allowed. My next suggestion would then have to be to follow the New Jersey law, which requires dealer tips to be pooled.

But where do smokers entertain their friends, if they can't go to their favorite casino, restaurant or bar? My guess is that most invite others to their homes, where there are no smoking restrictions. But it seems this solution creates an even bigger problem, with children frequently at home. Don't children count when we debate second hand smoke? Obviously some adults protect their children and go outside when the need for a cigarette arises; but many do not.

Clearly governments can set the standards for their work places, but the private sector should be able to do the same; as long as the non smoking employees and public are protected. And I believe this can be accomplished in smoking rooms, with superior ventilation and the requirement that employees servicing that room be smokers themselves.

I can't imagine a smoking waiter or dealer being successful in suing his employer for second hand smoke, or finding a lawyer willing to take his case on a contingency basis.

A study, I prepared for Illinois, when they banned smoking from their casino riverboats; tells a compelling story. The analysis covered the Greater Chicago population, and compares Indiana and Illinois casino establishments for the year following the no smoking ban in Illinois. The results for the following year, was a 21.8% casino revenue decline, 14.1% fewer patrons, a 9% decline in per capita win, and a 32.8% reduction in casino taxes. Negative impacts were also felt in the St. Louis area, where two Illinois casinos compete with 4 in Missouri, and in other parts of the State, that have no nearby option for smokers. Colorado casinos, after their ban on smoking, also saw an immediate 20% decline in casino revenues.

What is hard for me to understand, is a State's willingness to see enormous declines in tax revenues and jobs, that resulted from the casino smoking ban. Illinois’ win tax has declined from $785 million in 2007 (the year before the ban) to $426 million in 2010, a decline of $359 million or 46%. The comparisons after 2010 aren't relevant because a new casino opened in Des Plaines, a Chicago suburb.

And what about the thousands of restaurants and bars that have seen their revenues decline because of smoking bans. Hasn't that spurred layoffs, bankruptcies, closings and the accompanying decline in sales taxes, payroll taxes, corporate and personal income taxes and more people collecting unemployment, and various forms of welfare and assistance.

We have complete smoking bans in casino properties in Illinois, Colorado, Ohio, Maryland, Delaware and Florida, and Massachusetts is about to join that group. On the flip side; Pennsylvania, Atlantic City, plus many Tribal and Nevada casinos protect their customers by having restricted non-smoking sections on their gaming floors.

If America is really going to protect our citizens from the ills of smoking, it seems we should be following our experiment from prohibition in the 1920’s, and totally outlaw the manufacture and sale of cigarettes in the US or specific states. But this action would add hundreds of thousands of employees to our unemployment lines, and dramatically reduce State taxes.

There is no question smokers add $ billions more to our national health care costs, but as an offset, we collect many $ billions in revenues from the disproportionate tax imposed individually on the purchase of cigarettes; not unlike the disproportionate tax on alcohol and all forms of gaming. But another fact that can't be ignored, as we discuss the health care cost of smokers; is a smoker's shortened life expectancy. This reduces eventual medicare and other health care expenses, for those whose lives are cut short from this unfortunate habit.

As for Macao, the casinos themselves should suffer a further decline in win, taxes and employment, if smoking is not allowed in specific smoking rooms; where baccarat games are allowed. Non smoking employees can be protected, by having them work in other area of the casino hotels; where smoking is prohibited. The impact, however, will not be as bad as that experienced at the 4 Illinois casino in Greater Chicago; because the smoking related declines will be minimized by the increase in overnight hotel guests, enjoying the new destination casino accommodations.

Mrs. Angela Leong has an added concern, as her older casinos do not have the same air handling purification systems as the newer facilities, build by US gaming companies, the LV Sands, Wynn and MGM. And Mrs. Leong's casinos will be more competitive if a total smoking ban is introduced, or smoking is restricted to just a few non gaming, smoking rooms.