Casinos find smoking a hard habit to kick

casinos-smokingPennsylvania casinos have posted their first annual slots revenue increase in three years.

The Pennsylvania Gaming Control Board reported that the state’s dozen casinos reported slots revenue of $2.335b In the 12 months ending June 30, the close of the state’s fiscal year. That’s a gain of just under $15m (0.7%) from the previous fiscal year, marking the first annual increase since fiscal 2011-12. The numbers were boosted by a 2.7% year-on-year increase in the month of June.

Across the border in Maryland, the state’s five casinos reported revenue up nearly 27% to $92.4m in the month of June. However, if you exclude contributions from Horseshoe Casino Baltimore, which hadn’t yet opened last June, revenue at the four other casinos declined 5.1%.

The Horseshoe is the only Maryland casino at which patrons can smoke while they play slots, provided they’re cool with braving the elements. All five Maryland casinos have designated smoking areas but the Shoe has eight outdoor ‘smoking terraces,’ each of which is the size of a large apartment balcony equipped with a number of slot machines.

The Shoe’s VP of marketing Noah Hirsch told the Baltimore Sun that the slots & cigs combo allowed casino customers “more choices to explore how they like their entertainment.” The slots are only accessible if it isn’t raining or snowing outside and some patrons said the terraces wouldn’t be their first choice if it was particularly muggy out, but it’s apparently preferable to the alternative.

The state’s other casinos are considering following the Shoe’s lead. Rocky Gap Casino Resort was recently approved to install 30 slots on one of its outdoor smoking decks, which is set to open Aug. 1. Robert Norton, president of the state’s leading casino Maryland Live, said his property would consider following suit “if it makes sense.”

There’s no question that allowing customers to smoke in casinos makes financial sense. In May, Harrah’s New Orleans casino reported a 16% fall in gambling revenue after Orleans Parish imposed an indoor smoking ban in April. Figures from June show statewide casino revenue up 10.9% but Harrah’s was again down 16%. A Harrah’s spokesman said slots revenue was particularly hard hit following the ban.

Harrah’s could be waiting a long time for a rebound. In Chile, the country’s 16 casinos endured a 21% revenue decline after an indoor smoking ban was imposed in 2013. The Chilean Gaming Control Board released figures this month showing that the casino industry has only now achieved the same revenue levels it enjoyed in the first five months of 2012, before the ban took effect.

Small wonder then, that Macau’s casino operators – already dealing with 13 straight months of falling revenue – are dreading the special administrative region’s proposal to ban smoking in VIP rooms as well as the elimination of airport-style smoking lounges on the main gaming floor. Analysts have suggested the ban could trim 10% off mass market revenue and 15% off the VIP business.

Macau’s smoking legislation had its first reading on Thursday, followed by a vote in which 26 of 28 Legislative Assembly members voiced their approval of the plan. A working committee will now study the legislation before issuing a report, which will be followed by a second and final vote. Hopes are fading that the committee will recommend maintaining the smoking lounges, which the casinos spent an estimated $125m to construct just one year ago.