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Casinos face shareholder vote on indoor smoking

by SuperiorInvest

A new strategy has emerged in the battle to ban smoking in casinos: the shareholder vote.

Shareholders in boyd games, Bally Entertainment and Caesar Entertainment will put to a vote in the respective casino companies proposals to force them to study the costs associated with allowing smoking inside.

The proposals are sponsored by Trinity Health, a nonprofit health care network, and the Americans for Non-Smoking Rights Foundation. Trinity Health, based in Livonia, Michigan, has used its shareholder status to fight for various health initiatives even though it only owns a small fraction of these companies. For example, public records show that Trinity owns only 440 shares of Bally, or about 0.001% of the company.

Boyd, Bally's and Caesars fought to keep the proposals out of proxy materials distributed to shareholders. The Securities and Exchange Commission rejected the casinos' requests and the proposals, as well as the justification for them, were delivered to all shareholders.

Boyd will face a vote on a smoke-free assessment at its annual shareholder meeting on Thursday. Bally's holds its annual meeting on May 16, and Caesars will follow with its own meeting, likely in June.

The three companies collectively operate 75 US casinos that allow smoking indoors, where state law allows it. About 14 states allow smoking inside commercial casinos.

States like Nevada and New Jersey have banned indoor smoking more broadly, but have created exceptions for casinos. Legislation to end 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 by C3 Gaming that concluded that smoke-free casinos generate more revenue and outperform competitors that allow smoking.

The proposal's sponsors argue that shareholders should know how much casinos are paying in higher health insurance premiums for employees, higher maintenance costs and keeping away customers who hate smoke.

In his representation, Boyd maintains that a negative impact has been seen in states that banned indoor smoking. He argues that these decisions are best left to the properties to follow local trends, and says that if shareholders manage to implement a ban (which Boyd says is the real goal in forcing an assessment), the company will lose customers to competitors that continue to allow smoking. .

Jan Jones Blackhurst, a Caesars board member, said Wednesday at the SBC Summit North America, an online gaming conference, that she believes the decision to ban smoking in casinos should be left up to governments. She noted that experience has shown that smoke-free casinos can take an economic hit.

“In general, if you look at the United States, when casinos ban smoking, revenue drops by 20% to 25%, which also has a huge layoff factor, as people start to lose their jobs,” said.

Unions have mixed responses. While some worry about potential job losses, the United Auto Workers, which represents more than 10,000 table game dealers nationwide, has stepped up its efforts in the fight against casino smoking, citing the exposure of second hand from employees.

The Centers for Disease Control and Prevention says that “no exposure to secondhand smoke is safe and the only way to completely protect nonsmokers from secondhand smoke is through 100% smoke-free indoor environments.” .

The US Surgeon General says many common practices found in casinos, such as separating smoking and non-smoking sections, cleaning the air and ventilating buildings, are not effective protections against secondhand smoke.

Casino operator Parx, which operates venues in Pennsylvania, decided to remain smoke-free during the Covid pandemic at its property in Bensalem, north of Philadelphia. It competes with four other local casinos that allow smoking inside, but said it hasn't seen its market share suffer.

“Financially, we know we've lost some customers, but we also know we've gained some. We don't think we've seen a significant impact either way,” Parx spokesperson Marc Oppenheimer told CNBC.

Instead, the company said it is focusing on guest satisfaction scores and surveys that indicate increased employee morale.

In Las Vegas, MGM Hotels opened the first casino resort on the Strip that prohibits 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 fresh. Now, that includes the air you breathe.”

For now, Park MGM is the exception, but smoke-free advocates hope it will soon be the rule.

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