Do smoking bans affect business?

If the business is a casino, the answer is likely yes. A new paper from the St. Louis Fed examines the impact of the Illinois smoking ban on casino revenues and attendance as compared to neighboring states without a ban:

Using monthly data for adjusted gross receipts and total admissions at each of Illinois’ nine casinos, we estimate statistical models to explain the pattern of revenue over the period 1997 through 2008. The models include controls for trends, seasonal patterns, regulatory changes and the general pace of economic activity. After controlling for all these factors, we evaluate the remaining change in revenue that is attributable to the Smoke-Free Illinois Act, identifying the effects of the smoking ban by the timing of its implementation.

Our estimate for the effect on total revenue for all nine casinos is representative of our general findings: We estimate that the smoking ban is associated with a 20 to 22 percent revenue decline, amounting to a total loss in casino revenue of more than $400 million. This estimate implies that casino revenue in Illinois would have been approximately flat in the absence of the smoking ban (+/- 1 percent), rather than experiencing the 21 percent decline shown in the chart.

The presence of riverboat gambling in three states adjacent to Illinois provides an opportunity for comparing this finding with the experience of similar casinos that were not subject to the Illinois smoking ban. Using data for gambling revenue at casinos in Indiana, Iowa and Missouri, we find no significant change associated with the adoption of the Illinois smoking ban. The same calculation that leads to our finding of a 22 percent decline in Illinois revenue yields very small increases in Iowa (2.2) and Missouri (1.9) and literally zero percent change in Indiana. Statistically, these estimates are all consistent with no change in revenue. This observation confirms—at least at the statewide level—that the effect we identify for Illinois is unique. Casinos in each of these states suffered roughly the same downturn in economic activity, but only the Illinois casinos suffered the losses that our model associates with the implementation of the smoking ban.

[Thanks to Tony Tortorici for the heads up!]

Exemptions and employment revisited


3 thoughts on “Do smoking bans affect business?”

  1. The ONLY people who claim smoking bans are good for business are the people in TOBACCO CONTROL, who make THEIR money off pushing counseling and drugs. Take Dr. Rob Crane, for example, in Ohio. Bar owners are screaming for some relief and he has the dingleberries to come back at them saying business is on the increase! Look at the heated debate here.

    Note, too, Dr. Crane’s line of work.

  2. I for one am glad Independence passed a no-smoking ordinance. Now I don’t have to wait for a seat at my favorite eating place. I do miss my favorite waitress, who got laid off because of slow business, but what the heck, she probably didn’t need the extra money to feed her kids or help with the rent. It also saves the city time by not counting so much sales tax money.

Comments are closed.