Parx, Mount Airy Show Revenue Rewards Possible Without Smokers

smoking ban

A curious thing happened when Pennsylvania regulators allowed casinos to open their gaming floors to smokers again on June 28, after a restriction tied to COVID-19 precautions and mask mandates was lifted.

Two casinos — Parx and Mount Airy Casino Resort — independently opted to continue keeping their smokers outside, despite longtime contentions by the Pennsylvania casino industry that the loss of patrons’ smoking privileges could cut into gaming revenue.

Two others — Rivers Philadelphia and Live! Philadelphia — were required by the Philadelphia Health Department to resume smoking bans soon after the state restriction was lifted.

In 11 casinos, meanwhile, including the new Hollywood Casino York that opened in August, smokers can puff on the gaming floor today. Under state law that exempts casinos from public smoking prohibitions in Pennsylvania’s 2008 Clean Indoor Air Act, each casino has leeway to permit smoking on up to 50% of the gaming floor, though some keep it to a lower share than half.

Lobbying efforts in New Jersey, led by casino workers and groups opposed to public smoking as a health risk, have intensified this year to try to remove that state’s similar allowance for smoking. The nine Atlantic City casinos may have smoking on up to 25% of the gaming floor, and thus far the campaign to remove that option has been unsuccessful.

The same level of public outcry against casino smoking has not arisen in Pennsylvania, where bills introduced over the years to lift the exemption have repeatedly gained no traction. An advocacy group, Americans for Nonsmokers’ Rights, pointed to the state’s most recent casino revenue figures, however, to suggest they show gaming properties would suffer no ill effect from a permanent statewide smoking ban, based on the financial performance of Parx and Mount Airy.

Penn Bets decided to take a closer look at relevant numbers to see if that could be true.

Singling out specific revenue factors is difficult

It can be hard to separate out all of the factors that affect casino revenue, and which ones might be creating more traffic at one property while decreasing it at another. The smoking ban that existed everywhere in the first half of 2021, for instance, was tied in with numerous other COVID-related restrictions that reduced capacity, alcohol availability, and the number of slot machines in operation, and those were all also lifted by June.

In Pennsylvania’s case, as well, the opening of three new casinos in the past year — Live! Pittsburgh last November, Live! Philadelphia in January, and Hollywood Casino York three months ago — would be expected to siphon some revenue from other properties closest to them. There’s also some potential impact on retail casino visitation from the state’s online casino play, which reached a record $102.9 million in October.

And then there’s the underlying uncertainty of what lingering effect exists from any public concerns about health and finances tied to the COVID epidemic. That’s in addition to perennial impact on month-to-month casino revenue related to weather, property renovations, road construction, how the calendar falls, or other factors.

But by any yardstick, the Parx and Mount Airy casinos have performed well this year, with or without smoking, compared to competitors; Rivers Philadelphia has seen a steep revenue decline, presumably due to the new competition from Live! Philadelphia a few miles away; and the nine longtime casinos that operated with smoking bans in early 2021, but which allow it again now, are doing better than they were before June 28.

It’s hard to identify the extent to which smoking policies specifically are responsible at those nine casinos for which comparisons can be made before, during, and after the smoking ban: Harrah’s Philadelphia, Hollywood Casino at Penn National, Hollywood Casino at The Meadows, Lady Luck Nemacolin, Mohegan Sun at Pocono Downs, Presque Isle Downs & Casino, Rivers Pittsburgh, Valley Forge Casino Resort, and Wind Creek Bethlehem.

A deeper look at the numbers

Here are some month-to-month comparisons of note for slots and table games revenue at the various casinos:

June 2021 (compared to June 2019)

Parx: $52.7 million (+7.6%)

Mount Airy: $15.4 million (-2.5%)

Rivers Philadelphia: $18.5 million (-24.2%)

Nine present smoking casinos: $146.6 million (-17.8%)

With the exception of Parx, perennially the state’s busiest casino and revenue leader, all of the state’s properties were struggling compared to the same month two years earlier — before there was any impact from COVID or any restrictions tied to it, including on smoking.

July 2021 (compared to June 2021)

Parx: $58.5 million (+11%)

Mount Airy: $20 million (+29.9%)

Rivers Philadelphia: $23.6 million (+27.6%)

Nine smoking casinos: $176.1 million (+20.1%)

All casinos thrived in July, the first full month in which indoor smoking was allowed again. The state set an overall gaming revenue record at the time of $423.7 million, including $309.8 million in retail slots and tables revenue at the 14 casinos then in operation.

The renewal of smoking may have helped the nine venues that allowed it, but Mount Airy increased its revenue even more without it, by nearly 30%.

October 2021 (compared to October 2019)

Parx: $52.2 million (+2%)

Mount Airy: $16.2 million (+3.8%)

Rivers Philadelphia: $18.6 million (-25.6%)

Nine smoking casinos: $171.5 million (+1.9%)

With the exception of Rivers Philadelphia, again affected in the comparison by having to share a newly competitive market with Live! Philadelphia, the casinos — regardless of their smoking policies — seem to have settled into financial performance slightly ahead of pre-COVID operations.

The state’s gaming industry overall set another new record in October, at $425.9 million, but that was with less retail revenue ($292.4 million) than in July, as the summer vacation months tend to draw more casino visits.

What does it mean for the future?

When the Pennsylvania Gaming Control Board’s October revenue report came out, Americans for Nonsmokers’ Rights cited Parx’s continued success — and the high statewide numbers despite four casinos being smoke-free — as evidence that the need to have smoking to protect revenue is a myth.

“Operating smoke-free is good for business,” said Cynthia Hallett, president and CEO of the advocacy group. “We applaud Pennsylvania casinos that have chosen to protect their workers and also recognized the business benefits of creating a smoke-free environment that most casino visitors prefer.”

Numerous states other than Pennsylvania and New Jersey outlaw smoking within casinos, and Hallett noted it is now prohibited in nearly 1,100 gaming properties nationally. That number has grown during the COVID era, with many tribal casinos having kept intact prohibitions first established as a result of the pandemic health concerns.

Penn Bets reached out to Parx representatives for comment on their smoking policy and its impact, but no reply was received. In a recent article by CDC Gaming Reports, the casino’s chief marketing officer, Marc Oppenheimer, was quoted, “We’ve done it for the health and comfort of both our guests and team members. We have received significant positive feedback from both constituencies. And [we] have continued our strong performance and gains of market share in the region. As of now, we hope to be able to continue to remain an indoor non-smoking facility.”

Glenn Cademartori, Mount Airy’s vice president of marketing, provided a similar statement to Penn Bets about looking out for the “health and well-being” of both employees and guests.

“The feedback has been overwhelmingly positive from the former as well as the latter, and from smokers as well as non-smokers,” he said. He noted that many job applicants have shown interest in working in a non-smoking environment.

“In recent months, there has been no noticeable shift in visitation due to the continued restrictions,” Cademartori stressed.

That doesn’t mean Pennsylvania lawmakers are any more likely to end the smoking exemption than they have been since 2008. The issue has yet to show up as a priority for either Republican-controlled chamber. The more timely question may be whether any casinos look at the examples of Parx and Mount Airy and change their ways voluntarily.

None has publicly indicated any intent to do so thus far. Realistically, it may be harder for them to reverse the policy in existence now than simply to have continued the ban that had already been in place for many months, as Parx and Mount Airy did.

Photo: Shutterstock

Author: Wanda Peters