This week the Atlantic City Council voted unanimously to close a loophole in the New Jersey law banning smoking in public buildings. From 15 October unstaffed smoking lounges away from the gambling floor will be the only place that players can smoke in Atlantic City’s eleven casinos, if the operators provide such a facility. Donald Trump, chairman of Trump Entertainment Resorts with three casinos in Atlantic City, has already urged the casinos to sue because the ban causes a competitive disadvantage.

Casino trade in Atlantic City has been adversely affected by increasing competition, particularly from the new Pennsylvanian gambling industry. So far legislators in that state have not agreed an indoor smoking ban – last July the Senate rejected a House bill that had no exemption for casinos. Six legislators have now been given the task of coming up with a compromise bill and slot machine operators in Pennsylvania are lobbying hard for the smoking ban not to apply to casinos.

Since smoking bans took effect in Colorado and Illinois one operator, Penn National, says revenues in those states are down by as much as 20%. Non-smoking areas in Pennsylvanian casinos are also not as busy as smoking areas. It appears that at present the House is unlikely to relax its stance on a complete smoking ban that would include casinos but a prospective cut in gambling revenue will hardly appeal to the government.

So far the state has collected US$905 million from slot machines and by October is expected to distribute US$612 million for tax cuts and another US$48.5 million for property tax and rent rebates. US$87 million will be set aside to cut Philadelphia’s wage tax rate in 2009. By 2012 Pennsylvania is aiming for US$1 billion in tax cuts, provided by income from slot machine revenues. An indoor smoking ban that gives no exemptions for casinos could cut into those gambling taxes. (E-04.25.08)

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