State sees minimal effect under ban

OLYMPIA – Eighteen months after an indoor public smoking ban that many bar owners feared would destroy their businesses, state tax officials say the actual effect appears to have been minimal.

While cigar rooms and some other businesses may have been hit hard, state Department of Revenue spokesman Mike Gowrylow on Tuesday said, “On average, this reinforces what we’ve seen in other states. Smoking bans only have a short-term impact on businesses. They adapt.”

The exception: cardrooms and mini-casinos. Nontribal gambling businesses saw their gross income fall nearly 10 percent in 2006, according to Revenue statistics.

“The last year, year and a half has really been difficult,” said Dan Kukuk, president and general manager of 300 Inc., the corporation that owns Spokane’s Lilac Lanes mini-casino. “It (the smoking ban) had a severe impact on our finances.”

In November 2005, voters overwhelmingly approved Initiative 901, which banned smoking in bars and restaurants and within 25 feet of the doors and windows of businesses. Prior laws already banned smoking in most public buildings and workplaces.

Although it’s difficult to establish cause and effect, Gowrylow said, state tax officials believe bars and taverns may have lost some smokers but gained other customers. Gross business income from the state’s bars and taverns rose slightly by three tenths of a percent in 2006, versus average annual growth of 1.1 percent the four previous years, according to tax-collection statistics.

Bar and tavern gambling income was down, but their sales of food and drink rose 3.6 percent last year after four years of averaging 2.1 percent growth a year.

Lilac Lanes, a 45,000-square-foot complex that also includes a bar, restaurant and bowling alley, is a good illustration of how the December 2005 ban affected businesses differently.

In the bowling alley, it was a nonissue. Four years earlier, Lilac Lanes had banned smoking in the bowling area.

“Some long-term bowlers quit there immediately,” said Kukuk. “But on the other side of the coin, we had a lot more family units come in because there wasn’t smoking.” By the end of a nonsmoking year, he said, bowling business had increased.

In the bar, he said, the first several months of the smoking ban were “devastating.” Many smokers refused to go to a bar where they couldn’t also smoke.

“But where are you going to go?” he said. “You can’t smoke anyplace else unless you go to Idaho.” The bar business is starting to recover, he said.

It’s the casino part of the operation – a critical moneymaker, particularly during the slow summer months – that was hurt most by the smoking ban, he said.

“I don’t know why, but the majority of gamblers are smokers,” he said. Gambling revenues fell 40 percent in the two months after the ban, he said, “and it has never come back.” Smoking customers apparently went to tribal casinos, he said, which the state law banning indoor smoking cannot touch. Kukuk said Lilac Lanes laid off at least two dozen workers, including dealers, floor staff and security.

Overall, the restaurant industry did not appear to be hurt at all by the ban, according to the Department of Revenue. Taxable retail sales of full-service restaurants rose 9.1 percent last year, a slight increase over the prior-four-year average of 8.3 percent. Roughly 80 percent of restaurants were already non-smoking before the ban took effect.