Text of the report by State Police to the Louisiana to Louisiana Gaming Control Board Dec. 18, 2014

Transcription

1 Text of the report by State Police to the Louisiana to Louisiana Gaming Control Board Dec. 18, 2014 Good morning Chairman Jones and board members. I am Jeff Traylor, Audit Director for the Gaming Enforcement Division. Chairman Jones asked us to provide a picture of how a potential smoking ban in Orleans Parish might affect gaming revenues and state fees. In order to do this, we used the most recent numbers for Harrah s New Orleans, Fair Grounds Race Course and Slots, and video poker establishments in Orleans Parish. For Harrah s and Fair Grounds we used November 2013 through October Since we report video poker information by parish quarterly, we used October 2013 through September 2014 for the video poker calculations. We applied percentage decreases over a two-year period based on a PriceWaterhouseCoopers study that determined an almost 12% decrease in Delaware for the 1 st year of a smoking ban and further concluded that a smoking ban in Atlantic City would result in a 20.4% decrease in gaming revenues over a two-year period. We contacted Colorado and reviewed their revenues to see how the smoking ban affected those casinos. Colorado s smoking ban started in January 2008, which coincides with the national economic downturn. In the first year, Colorado s statewide revenues declined 12.3%. Overall, through the end of 2013, Colorado s revenues are down 8.3% from the pre-smoking ban revenues. Colorado also made changes to its gaming laws in 2009 that allowed casinos to increase betting limits from $5 to $100, operate 24 hours a day, and add craps and roulette to the previously approved games of blackjack and poker. In addition, according to the Colorado Division of Gaming, the casinos are located in 3 mountain towns approximately 30 minutes from major population centers. Conversely, Orleans Parish has a neighboring parish, Jefferson, with two riverboat casinos, several OTBs and numerous other video poker establishments; and Baton Rouge and the Mississippi Gulf Coast casinos approximately one hour away. We also looked at statewide video poker revenues after the Louisiana ban on smoking in restaurants began in Those figures are difficult to analyze because of the record revenue levels after Hurricane Katrina. While restaurants decreased 24.1% in 2007, bars and hotels also decrease by approximately 10% and overall, revenue in 2007 decreased 5.6%. We also have to factor in that revenue in 2006 was the highest video poker revenue total since at least 2000 and possibly in the 20+-year history of video poker in Louisiana. In addition, after Katrina there

2 were approximately 250 fewer restaurant establishments with 600 fewer machines. As of the end of fiscal year 2013/2014, there are 600 fewer restaurants with video poker devices and almost 1,400 fewer devices. As of December 2013, overall, video poker is down 15%, while video poker at restaurants is down 52%. Additionally, bars are down 33% and hotels are down 39%. Back to the revenue calculations, we calculated projected revenues using a decrease of 12% in year 1 and 9.5% in year two for a two-year total reduction of 20.4%. We did not include restaurants in the revenue reduction calculations. After calculating the reduction for all other forms of gaming, we added the restaurant revenues back for the final calculation. Based on these calculations over the two years, gaming revenue in Orleans Parish would decrease by $86.4M and fees would decrease $17.4M compared to the most current 12 months of revenues. One further note, there is disagreement on what effect a smoking ban has on gaming establishments and the overall economy; we did not conduct a study to determine whether or not a smoking ban would affect revenues. We simply applied percentages from a previously conducted study to provide a picture for the Board of what a smoking ban might look like based on the conclusions of the that study. Letter%from%The%SmokeFree%New%Orleans%Coaltion%to%the%New%Orleans%City% Council,%sent%Dec.%19,%2014.%%! To!the!Honorable!members!of!the!New!Orleans!City!Council,! The!time!is!right!for!a!smoke;free!New!Orleans.!With!a!comprehensive! ordinance!that!covers!all!workplaces,!new!orleans!will!join!other!top! tourist!destinations!including!dallas,!chicago,!boston,!san!francisco,! Honolulu,!and!New!York!City.!The!evidence!on!secondhand!smoke s!toll! on!public!health!is!clear.!secondhand!smoke!contains!more!than!7,000! chemicals,!hundreds!of!them!are!toxic!and!at!least!69!cause!cancer.!in! addition,!the!surgeon!general!has!found!that!secondhand!smoke!causes! heart!disease!and!lung!cancer!in!nonsmoking!adults!and!respiratory! problems,!sudden!infant!death!syndrome,!and!low!birth!weight!in!infants!

3 and!children.! Yet,!we!also!know!that!almost!every!smoke;free!ordinance!campaign! includes!a!discussion!on!the!economic!impact!of!smoke;free!laws.!the! tobacco!industry!and!its!front!groups!love!to!claim!that!smoke;free!laws! have!a!negative!effect!on!business,!especially!on!the!hospitality!sector.!in! fact,!for!several!decades!they!have!been!claiming!that!businesses!will! lose!"20;30%"!of!their!profits.! However,!numerous!reputable!studies!based!on!objective!sales!tax! data!from!a!period!before!and!after!implementation,!have!shown!no! negative!impact,!and!in!a!few!cases,!studies!have!shown!a!positive! impact.!it!is!now!clear!that!workplaces!that!have!adopted!smoke;free!air! policies!reap!great!economic!benefits!from!those!policies.! Don t&believe&the&hype! &! By!now,!you!have!probably!received!a!handful!of!studies!from!casino! representatives!and!even!some! impartial!agencies!that!predict! economic!doom!and!gloom!for!new!orleans!if!a!smoke;free!policy!is! passed.!their!goal:!to!divert!your!attention!away!from!the!public!health! benefits!of!smoke;free!policies!and!create!an!atmosphere!of!doubt!and! fear.!opposition!messengers,!parroting!the!talking!points!of!casino!and! tobacco!industry!interests,!operate!from!the!same! playbook!in!cities! and!states!throughout!the!country.! False&claims! The!alleged! Federal!Reserve!Bank!study!conducted!by!Michael!Pakko!is! often!distributed!to!undermine!political!support.!pakko,!an!economist! active!in!the!libertarian!party,!was!once!employed!by!the!federal! Reserve!of!St.!Louis!and,!as!a!result,&his&research&is&frequently& misinterpreted&to&be&sponsored&by,&or&representative&of,&this& federal&institution,&when&in&fact&it&is&not.!pakko!presents!no!statistical! evidence!to!support!his!claims.!in!addition,!he!ignores!explanations!given! by!the!impacted!entities!themselves,!the!delaware!casinos.!in&official&us&

4 Securities&and&Exchange&Commission&filings,&the&casinos&do&not& suggest&that&the&smokedfree&law&has&had&any&effect&on&revenues.! Pakko!has!also!authored!studies!in!Missouri!and!Delaware.!None!of! Pakko s!studies!has!been!peer;reviewed.!none!measures,!at!minimum,! even!a!full!year!of!sales!tax!revenues.!his!claims!have!been!discredited!by! independent,!evidence;based!research. 1! 2005&Delaware&Study&D&This!PricewaterhouseCoopers!report,! commissioned!by!the!casino!association!of!new!jersey,!made!bold! predictions!for!revenue!and!job!losses!following!enactment!of!the!state s! smoke;free!law.data!from!the!delaware!alcohol!beverage!control! Commission!show!that!the!number!of!restaurant,!tavern!and!taproom! licenses!increased!in!the!year!since!the!law!took!effect.!data!from!the! Delaware!Department!of!Labor!show!that!employment!in!the!state s!food! service!and!drinking!establishments!also!increased!in!the!year!since!the! smoke;free!law!went!into!effect.!please&note&that&delaware s& workplaces,&restaurant,&bars,&and&casinos&remain&100%&smokedfree& as&we&enter&2015,&thirteen&years&after&enactment&of&its& comprehensive&law&in&2002.! Despite!opposition!efforts!to!divert!the!message!away!from!worker! health!with!arguments!of!economic!downturns,!the!evidence!speaks!for! itself:! Smoke;free!laws!have!no&adverse&effect!on!total!gambling! revenues;! Smoke;free!gaming!is!popular!among!gaming!employees!and! management;! Gaming!patrons&favor!smoke;free!indoor!air.! SmokeDfree&Air&is&Good&for&Business&and&Health! &! A!study!released!by!the!U.S.!Centers!for!Disease!Control!and!

5 Prevention!(CDC)!found!that!a!comprehensive!smoke;free!policy! in!el!paso,!texas!did!not!affect!restaurant!and!bar!revenue!in!the! year!after!it!took!effect!in!january!2002.!the!cdc!and!the!texas! Department!of!Health!analysis!found!no!statistically!significant! changes!in!overall!restaurant!and!bar!revenues,!bar!liquor!sales,! or!restaurant!and!bar!revenue!as!a!percentage!of!total!revenue.! A!study!published!in!2007!assessed!the!economic!impact!of!a! smoke;free!law!in!lexington;fayette!county,!kentucky.!the! study!found,! No!important!economic!harm!stemmed!from!the! smoke;free!legislation!over!the!period!studied,!despite!the!fact! that!lexington!is!located!in!a!tobacco!producing!state!with! higher;than;average!smoking!rates.! A!July!2006!report!on!The!Health!and!Economic!Impact!of!New! York s!clean!indoor!air!act!(ciaa)!found!that! the!law!has!not! had!an!adverse!financial!impact!on!bars!and!restaurants.!the! report!examined!sales!tax!receipts!from!1999!to!2004!from!a! sample!of!vendors!who!had!filed!tax!return!for!each!quarter.!the! analysis!showed!that! the!ciaa!had!no!apparent!effect!on!sales! tax!receipts!for!bars!or!full!service!restaurants!or!on!totals!from! all!retailers!in!new!york!city!or!new!york!state.! These!are!just!a!sampling!of!the!many!credible!studies!showing!that! smoke;free!laws!are!good!for!business.!while!the!primary!intent!of!the! smoke;free!ordinance!is!to!protect!bar!and!casino!employees,! entertainers!and!patrons!from!the!known!harms!caused!by!exposure!to! secondhand!smoke,!we!understand!your!concern!for!the!economic! viability!of!the!city!you!are!sworn!to!protect.! Rest!assured!that!a!smoke;free!ordinance!that!protects!all!workers,! residents,!and!visitors!from!secondhand!smoke!exposure!is!a!measure! welcomed!by!local!residents!as!well!as!tourists!from!around!the!world.! We!appreciate!your!consideration!of!this!important!measure.Please!let! us!know!how!we!can!provide!you!with!the!information!you!need!to! support!a!smoke;free!new!orleans!for!everyone.!

6 Sincerely,! The!SmokeFree!New!Orleans!Coalition

7 The Palace Casino GROWTH TWO YEARS AFTER IMPLEMENTING A SMOKE- FREE POLICY T he Palace Casino in Biloxi implemented a smokefree policy when it reopened on June 14, The casino voluntarily prohibited smoking inside all of the casino facility, with the exception of a smoking lounge located off of the casino floor. The purpose of this brief is to summarize the available data about the potential economic impact of this new policy. The Mississippi Gaming Commission releases quarterly reports that provide data on all of the nonreservation casinos. Although these reports do not release revenue data, the commission does release data on the number of employees, number of slot games, and number of table games for each casino. This brief examines these data for the Palace Casino, in the context of the Coastal Region Casinos. COASTAL REGION CASINOS 1. Beau Rivage 2. Boomtown 3. Grand Casino 4. Hard Rock Casino 5. Hollywood Casino 6. Imperial Palace 7. Island View Casino 8. Isle of Capri 9. Palace Casino 10. Sliver Slipper 11. Treasure Bay NUMBER OF EMPLOYEES AT THE PALACE CASINO Number of employees at the Palace Casino increased by 18% after {going. 2007/8 2008/9 2009/ / /12 = 50 Employees % 6.10% PERCENT OF TOTAL (COASTAL) EMPLOYEES AT THE PALACE CASINO Percent of coastal employees who work at the Palace Casino increased by 23% {after going. 2007/8 2008/9 2009/ / /12 Air Quality & Workforce at the Smoke-Free Palace Casino : December

8 NUMBER OF HOTEL EMPLOYEES AT THE PALACE CASINO Number of hotel employees at the Palace Casino increased by 23% {after going. 2007/8 2008/9 2009/ / /12 = 5 Employees PERCENT OF TOTAL (COASTAL) HOTEL EMPLOYEES AT THE PALACE CASINO 5.00% 5.29% % 7.43% 6.81% Percent of coastal hotel employees who work at the Palace Casino increased by {29% after going. 2007/8 2008/9 2009/ / /12 NUMBER OF SLOTS AT THE PALACE CASINO ,059 1,001 Number of slots at the Palace Casino increased by {27% after going. 2007/8 2008/9 2009/ / /12 = 100 Slots 2 Air Quality & Workforce at the Smoke-Free Palace Casino : December 2013

9 PERCENT OF TOTAL (COASTAL) SLOTS AT THE PALACE CASINO 5.55% 5.59% 5.68% 5.72% 7.33% 2007/8 2008/9 2009/ / / % Percent of coastal slots located at the Palace Casino increased by 25% {after going. NUMBER OF TABLES AT THE PALACE CASINO Number of tables at the Palace Casino increased by {64% after going. 2007/8 2008/9 2009/ / /12 = 2 Tables PERCENT OF TOTAL (COASTAL) TABLES AT THE PALACE CASINO 3.34% 3.46% 3.53% 3.93% 5.60% 2007/8 2008/9 2009/ / / % Percent of coastal tables located at the Palace Casino increased by 64% {after going. Air Quality & Workforce at the Smoke-Free Palace Casino : December

10 R E S U L T S M E T H O D S Data from the Mississippi Gaming Commission demonstrate that the Palace Casino experienced no reduction in the number of employees, slot games, or table games during the year after implementing a policy in June of Data from the Coastal Region Casinos demonstrate no reduction in the Palace Casino market share of the region after implementing a policy in June of 2011, as measured by the number of employees, slot games, or table games. Although it is possible that the modest increases observed after the policy are because the casino increased its square footage during the renovation preceding the policy, there was no evidence of a reduction in workforce or the amount of gaming. Based on the publicly available data from the Mississippi Gaming Commission, the implementation of a policy did not harm the Palace Casino. Palace Casino data are examined for the number of employees, number of slot games, and number of table games for fiscal years 2007/08-. Data are also examined for the total number of employees, number of slot games, and number of table games in the Coastal Region. The New Palace Casino implemented their smokefree policy in mid-june of 2011, and thus these data provide post-policy data. Raw numbers of employees, slot games, and table games are provided for the New Palace Casino. Percent of employees, slot games, and table games in the Coastal Region that are housed in the New Palace Casino are also provided. These data illustrate the amount of the casino market in the Coastal Region that the New Palace Casino occupies. C A U T I O N A R Y N O T E Data are only available for one year after implementing a policy. Data from subsequent years will be necessary to assess any long-term positive or negative trends in the number of employees, slot games, or table games. Also, the number of employees, slot games, and table games serve as a proxy for revenue (because revenue data is not available) and may not perfectly correlate with revenue. gaming floor, and policy, these results clearly demonstrate that the Palace Casino did not suffer as a result of implementing a policy. FOR MORE INFORMATION CONTACT Robert McMillen, Ph.D. Social Science Research Center Mississippi State University ROBERT.MCMILLEN@SSRC.MSSTATE.EDU One Research Blvd., Suite 103 P: Starkville, MS F: For more information visit MSTOBACCODATA.ORG 4 Air Quality & Workforce at the Smoke-Free Palace Casino : December 2013