Illinois smoking ban sends casino revenues down

On Jan. 1, a smoking ban went into effect in the state of Illinois, banning smoking in virtually all public places including offices, theaters, museums, libraries, educational institutions, schools, commercial establishments, enclosed shopping centers and retail stores, restaurants, bars, private clubs and gaming facilities. As a result of the ban, Illinois riverboat casino revenues have dropped significantly compared to the same time last year.

In May of 2008, adjusted gross receipts for Illinois riverboat casinos dropped more than 14 percent compared to the same month in 2007, according to the Illinois Gaming Board’s monthly report. Compared to the same time last year, total adjusted gross receipts for the calendar year-to-date through May 2008 have dropped almost 17 percent while casino attendance has decreased by a total of almost 6 percent. Moreover, since January of 2008 and the enactment of the smoking ban, adjusted gross receipts have dropped for all nine riverboat casinos in Illinois, compared to the same time last year.

Compared to May of last year, state and local tax allocations have dropped 23 percent and 12 percent respectively during this past May.

On May 8 the Michigan Senate passed Senate Substitute for House Bill 4163, banning smoking in public places including bars, restaurants, indoor areas and the Detroit casinos. The proposed legislation passed the Michigan Republican-controlled Senate by a vote of 25-12 and remains pending in the Michigan House.

Conversely, on May 28, the Michigan House of Representatives passed Substitute for House Bill 5074, calling for a ban on smoking in public places and in the work place. HB 5074 was passed by a 65-39 margin. Importantly, the proposed bill contains an exemption for the three Detroit casinos and racetracks, and is similar to the original version of House Bill 4163, which the House passed on Dec. 5, 2007.

With the implementation of a smoking ban in Illinois as an example of how a state’s legislature can have a detrimental impact on business within a state, the choice of whether or not to implement smoking ban policies should be left wholly up to the businesses entities involved. It would be wise for legislators to seriously consider the potential negative impact on state and local tax revenue that would occur if there is a smoking ban, given the financial problems in the state of Michigan.