Inside Gaming: Macau bans smoking on floors

Come October, Macau’s casinos won’t smell the same.

The special administrative region government last month told its resort operators that smoking will be banned on mass-market gaming floors starting Oct. 6.

Here’s the surprise: Macau’s six casino operators — including MGM Resorts International, Wynn Resorts Ltd. and Las Vegas Sands Corp. — asked for the prohibition.

The ban doesn’t include Macau’s private gaming rooms. Casinos can build smoking rooms on the gaming floors, which have their own heating, ventilation and air conditioning systems. But the rooms can’t include table games or slot machines.

So with the world’s largest gaming market by revenue going smoke-free, will Strip casinos ever embrace a full-scale smoking ban?

Gaming insiders laugh at that notion. Any change in attitude toward smoking would defy the “do anything” mantra that is Las Vegas.

The Strip has adopted some nonsmoking ideas. Several casinos, notably CityCenter’s Aria, have banned smoking in race and sports books. Most poker rooms are smoke-free, including the Rio’s 60,000-square-foot convention center, which began hosting the World Series of Poker last week.

Most casinos offer nonsmoking gaming areas while companies tout modern technology that cleans and filters indoor air at increased rates. Some table game pits and slot machine areas have special ventilation units.

Stephanie Steinberg, however, doesn’t believe Strip casinos are doing enough to protect dealers and other employees from the harmful effects of secondhand smoke. She hopes the Strip will join Macau’s clean-air embrace.

As chairwoman of the Washington, D.C.-based Smoke-Free Gaming of America, Steinberg has long lobbied for casinos to ban indoor smoking, with a measure of success.

Colorado’s casino industry, which initially allowed smoking, banned the activity in 2008. Ohio’s gaming market opened as nonsmoking. Massachusetts’ casinos will be nonsmoking.

Genting’s Resorts World New York casino, which operates 5,000 slot machines and is touted as the single largest slot gaming property by revenue in the country, allows smoking only near parking garage entrances and at the front casino entrance, not on the gaming floor.

In Maryland, which banned smoking in casinos when table games were added, both the $443 million Horseshoe Casino Baltimore and the nearly $1 billion MGM Resorts’ National Harbor development will open smoke-free.

In Atlantic City, 75 percent of the casino floors are nonsmoking.

Steinberg still believes Las Vegas can change.

“The examples are being set,” Steinberg said.

MGM Resorts spokesman Clark Dumont said his company, which operates 10 Strip casinos, recognizes “that smoking is a dynamic and complex issue, one that we will continue to monitor and to discuss.”

Analysts said Macau’s government won’t do anything that might upset the enclave’s record-smashing gaming revenue production, which hit $45.2 billion in 2013 and already is up 17.5 percent through April.

The ban affects traditional Macau gaming floors, which are filled with baccarat tables and other games that attract the growing middle class from mainland China. It exempts the high-end private VIP gaming rooms, where big-spending players wager millions of dollars away from the public’s prying eyes.

“We remain confident that there will not be a measurably negative impact on gross gaming revenue,” Union Gaming Group analyst Grant Govertsen, who is based in Macau, wrote in a research note.

“With respect to the mass-market segment that will be subject to this new dynamic, we believe that gaming will always trump smoking,” Govertsen said. “For those customers who absolutely must smoke, the smoking rooms will likely be in extremely close proximity to gaming floors, suggesting an absolute minimum amount of time spent away from tables.”

In December, casino operators independently petitioned the government, asking that mass-market gaming floors go smoke-free in exchange for allowing smoking rooms.

The move came when it looked as if the government would require 14 casinos that repeatedly had failed air quality tests to implement smoke-free mass-market floors. It was thought the rest of the industry would follow.

“With nearly five months to go before this measure goes into effect, we believe this affords each operator enough time to design, construct and implement smoking rooms,” Govertsen said.

He said he expects most casinos will add multiple smoking rooms, given “the sheer size of many (gaming) floors.”

China is considered a nation of smokers. According to different studies, at least 25 percent of China’s population smokes.

By exempting private gaming rooms from the smoking ban, Macau won’t disrupt activity in the market’s most profitable venues.

“We think that VIP and premium mass will be insulated,” Govertsen said.

MGM China CEO Grant Bowie said in an email exchange he expects the Macau government will eventually make some of the private gaming rooms nonsmoking.

Bowie said he didn’t expect the change to hurt the company’s operations in Macau, where it owns the MGM Macau and is building a $2.9 billion resort on the Cotai Strip.

“While a lot of customers smoke, I don’t think it will change the model,” Bowie said. “Like all initiatives like this, we will need to monitor. The trend to reduce smoking in enclosed public spaces is a worldwide trend.”

Macau imposed a partial smoking ban in some casino areas in 2013. The move didn’t slow gaming revenue production.

The full-scale smoking ban takes effect following Golden Week, one of Macau’s more lucrative holidays.

“I believe that the air quality of the mass-market floors will be improved after the gaming venues install smoking rooms,” Macau’s Secretary for Social Affairs and Culture Cheong U told Asian media.

Howard Stutz’s Inside Gaming column appears Wednesdays and Sundays. He can be reached at hstutz@reviewjournal.com or 702-477-3871. Follow @howardstutz on Twitter.

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