A new strategy has emerged in the fight to ban smoking in casinos: the shareholder vote.
Shareholders at Boyd Gaming, Bally's Entertainment And Caesars Entertainment will put proposals to the vote at the respective casino companies to force them to study the costs associated with allowing smoking indoors – and whether going smoke-free can save money.
The proposals are sponsored by Trinity Health, a nonprofit health care network, and the American for Nonsmokers' Rights Foundation. Trinity Health, based in Livonia, Michigan, has used its shareholder status to champion several health initiatives, despite owning a small portion of these companies. For example, public records show that Trinity owns just 440 shares of Bally, representing 0.001% of the company.
All three casino companies fought to keep the proposals out of proxy materials distributed to shareholders. The Securities and Exchange Commission denied the casinos' requests, and the proposals and rationale behind them were delivered to all shareholders.
Boyd Gaming will vote on a smoke-free rating at its annual shareholder meeting on Thursday. Bally's will hold its annual meeting on May 16, and Caesars will follow with its own meeting, likely in June.
The three companies jointly operate 75 U.S. casinos that allow smoking indoors where state law permits. About 14 states allow indoor smoking in commercial casinos.
States like Nevada and New Jersey have banned smoking indoors more broadly, but have made exceptions for casinos. Legislation to end indoor smoking in casinos is in various stages in several states across the country, including New Jersey, Pennsylvania and Rhode Island.
Smoking ban advocates point to research from C3 Gaming showing that smoke-free casinos generate more revenue and outperform competitors that allow smoking.
Proposal sponsors argue that shareholders should know how much casinos pay in higher employee health insurance premiums, higher maintenance costs and keeping away customers who hate the smoke.
In his proxy, Boyd argues that it has seen a negative impact in states that ban smoking indoors. It argues that these decisions are best left up to the properties to follow local trends and says that if shareholders are successful in enacting a ban (which Boyd says is the real goal of forcing a review), the company will lose customers to competitors who continue to allow smoking. .
Caesars board member Jan Jones Blackhurst said Wednesday at the SBC Summit North America, an online gaming conference, that she believes the decision on whether to ban smoking in casinos should be left up to governments. Still, she acknowledged that casinos would take an economic hit if smoking bans were introduced.
“Generally speaking, if you look at the United States, when casinos ban smoking, revenues drop by 20% to 25%, which also creates a huge layoff factor, where people start losing their jobs,” she said.
The unions are divided over their response. While some worry about the potential of job losses, the United Auto Workers union, which represents more than 10,000 table game dealers nationwide, has stepped up its efforts to combat smoking in casinos, citing secondhand exposure for workers.
The Centers for Disease Control and Prevention says that “no amount of exposure to secondhand smoke is safe and the only way to fully protect nonsmokers from secondhand smoke is through 100% smoke-free indoor air environments.”
The U.S. Surgeon General says many common practices in casinos, such as separating smoking and non-smoking areas, cleaning the air and ventilating buildings, do not provide effective protection against secondhand smoke.
Casino operator Parx, which operates locations in Pennsylvania, decided to remain smoke-free at its property in Bensalem, north of Philadelphia, during the Covid pandemic. It competes with four other local casinos that allow indoor smoking, but says it hasn't seen its market share suffer.
“Financially, we know we've lost some customers, but we also know we've gained some customers. We don't think we've seen a significant impact either way,” Parx spokesman Marc Oppenheimer told CNBC.
Instead, the company focuses on guest satisfaction scores and surveys that indicate a boost to employee morale.
In Las Vegas, MGM Resorts opened the first casino resort on the Strip to ban smoking indoors and even smoking on the pool deck. On its website, the property states: “Here at Park MGM, we're not afraid to be different and, as you may have noticed, we're all about what's fresh. That includes the air you breathe.”
For now, Park MGM is the exception, but smoke-free advocates hope it will soon be the rule.