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The Revenue Performance of Casinos after a Smoking Ban: The Case of Illinois

Recent state-wide smoking bans are likely the most significant regulations imposed on the casino gaming industry. We explore the effects that the Illinois state smoking ban has had on Illinois casino revenue and attendance as well as casino tax revenue. Our empirical methodology extends and enhances that of previous literature in that we observe a natural experiment in comparing the performance of Illinois casinos with out-of-state casinos (no smoking ban) that share a market with Illinois casinos. Estimates suggest that revenue and admissions at Illinois casinos declined by more than 20 percent ($400 million) and 12 percent, respectively. Calculations reveal that casino tax revenue to state and local governments declined by approximately $200 million.

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