St. Louis Casinos Face Smoking Ban, Jeopardize Riverboat Gaming Revenue

St. Louis casinos are already struggling financially, and come November, the riverboats could face new hardships should voters decide to ban smoking on the gaming floors.

Three casinos would be impacted should citizens in St. Louis and St. Charles counties support respective smoking bans.

St. Charles County voters will ponder two proposed smoking prohibitions. One would outlaw indoor smoking everywhere other than cigar bars, tobacco stores, and private clubs. Another would also ban indoor smoking, but would provide certain exceptions including giving casinos the right to designate up to half of its gaming floor for smoking.

In St. Louis County, residents will be tasked with deciding whether to strengthen the area’s smoking ban and remove privileges for casinos. Only a simple majority is needed for the ballot questions to pass.

Lumiere Place, located in downtown St. Louis, wouldn’t be affected, as the city proper isn’t in the county and is an independent city.

St. Louis area casinos, including the two properties on the Illinois side of the Mississippi, reported stagnant gross gambling revenues in 2017. The six casinos in the region won $1 billion, roughly $800 million less than what they made in 2011.

Smoking Debate

The impact on smoking bans inside casinos isn’t cut and dry.

MGM Resorts recently said of its requirement to go smoke-free at its $960 million Springfield casino in Massachusetts that “regional gaming competition, driving distance, weather, and socioeconomic conditions” are far more important than the allowance of smoking in determining a successful casino property. But Caesars said New Orleans’ smoking ban at its Harrah’s casino cost the venue almost $70 million in gaming revenue over the first two years of the emargo.

Jefferies gaming analyst David Katz opined this week that the potential smoking bans could hurt the two St. Louis casinos.

“Our experience is that smoking bans could result in significant revenue declines,” Katz said in a note. “However, the detrimental effect may be mitigated given one proposal permits smoking on half the casino floor.”

In St. Louis, Penn National owns Hollywood and is in the process of acquiring River City from Pinnacle Entertainment. Boyd Gaming is acquiring Ameristar from Pinnacle.

Nationwide Smoke Out

St. Louis is just the latest region to consider banning smoking inside casinos.

Illinois forced its casinos to go smoke-free in 2008. A decade later, operators there say the clean air regulations have led to a 20 percent drop in revenue.

“We do know … that the more time someone spends on the casino floor, the more likely they are to keep playing,” Illinois Gaming Association Executive Director Tom Swoik said in January. “If they have to go outside to smoke, they’re more likely to light up and then leave.”

Councilmembers in Gary, Indiana, are currently considering extending its indoor smoking ban to casinos. Majestic Star CEO warned local officials that such a ban would result in the loss of 400 jobs, and $3 million in annual city tax revenue.