Is Chile’s Smoking Ban Killing Casino Business?
In March 2013, Chile passed a law banning public smoking which seemed like the right thing to do and which is pretty much in line with most countries around the world.The intention of the ban was right especially since Chile has the highest percentage of adult smokers in the world of around 40%.
The downside of the ban is that casino revenues have plummeted on average by 24%.
While a decline was expected, as it had the same results in Argentina and Uruguay when similar bans came into effect, it was definitely not expected to this extent.
The ban requires smokers to go outside to smoke which for many gamblers is inconvenient and many have confessed to cutting back on gambling.
Some have even chosen to stay away entirely. The impact, however, extends even beyond just player inconvenience.
Enjoy SA, a major casino operator, is feeling the effect financially and so much so that Bond investors are concerned that Enjoy, which has 71 billion pesos of debt payments due this year, will fail to meet covenants that require it to keep its ratio of net debt to earnings before interest, taxes, depreciation and amortization, below 5.5 times.
Enjoy has taken steps to try remedy the situation by building a new smoking section that is unattached to the main building in the hopes to lure back smoking gamblers.