Casino Investors Taking a Firm Stance Against Smoking
More major investors are urging publicly traded casino operators to transition to smoke-free environments, with the 2024 proxy serving as evidence of these heightened efforts.
This proxy season, large shareholders of Bally’s (NYSE: BALY), Boyd Gaming (NYSE: BYD), and Caesars Entertainment (NASDAQ: CZR) have pushed for smoke-free proposals. According to Bloomberg Law, Bally’s investors showed 11.6% support for the initiative at the regional casino operator’s annual meeting in May, while Boyd investors’ support nearly doubled to 22.5%.
On Tuesday, a majority of Caesars investors rejected a proposal from other shareholders requesting a report on the potential cost benefits of transitioning to smoke-free properties. While the majority of investors at these gaming companies turned down the anti-smoking proposals, the support percentages at Bally’s and Boyd are noteworthy. These high percentages allow shareholders to submit similar proposals again in 2025. As of Tuesday, Caesars had not disclosed the percentages of the anti-smoking vote.
“Proposals that receive 5% or more of a shareholder vote can be resubmitted the following year. The threshold increases to 15% in the second year and 25% in the third year,” reports Clara Hudson for Bloomberg Law.
Together, Bally’s, Boyd, and Caesars operate over 70 gaming venues across the US. By number of properties, Caesars is the largest casino operator in the country. In its most recent proxy statement, Caesars noted that it already operates 10 gaming venues in seven states that are smoke-free due to local laws.
Operators Concerned About Competitive Threats
When it comes to opposing efforts to curb smoking inside gaming venues, the common refrain among operators is that embracing such a move could potentially drive smoking customers to rivals’ establishments.
“Adopting a property-wide smoke-free policy would have significant competitive implications, as customers who wish to smoke while gaming could consider patronizing a competitor,” noted Boyd in its proxy statement. “We have previously experienced such negative impacts in markets subject to smoking bans.”
However, data from some markets refute these claims. In Nevada, the largest casino market in the US, a recent poll by the Nevada Tobacco Control and Smoke-Free Coalition indicates nearly six in ten respondents favor the state’s casinos going smoke-free.
Caesars, which runs the most gaming venues of any operator in Nevada, said going smoke-free across the board “may risk alienating our smoking customers,” though the company does have some smoking restrictions in place at its Nevada properties, including banning the habit in eateries and restrooms.
Why Casino Investors Want to Curb Smoking
Casino investors’ push to limit or ban smoking at properties they invest in reflects a blend of altruistic and capitalist motivations. According to the Surgeon General, there is no credible way to mitigate the harmful effects of secondhand smoke.
In casinos that allow smoking, frontline employees such as bartenders, cocktail waitresses, and dealers are particularly vulnerable to these risks. This vulnerability increases the likelihood of health-related absences among staff, potentially exposing operators to litigation.
Cost is another significant factor. Last year, the average cost of employer-sponsored healthcare plans approached $15,800 per employee, according to Mercer. For large employers like gaming companies, this figure slightly dropped to $15,640 per insured worker, but when aggregated across all insured gaming employees, it represents a substantial expense.
Moreover, smoking-related expenses cost US employers nearly $200 billion annually by some estimates. Some corporations enforce policies prohibiting smoking on company premises, and certain sectors, including parts of the gaming industry, may even withhold health insurance from employees who smoke. These issues are pivotal for investors advocating smoke-free policies among casino operators.
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