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State smoking ban blamed for charity losses

ST. PAUL -- A statewide smoking ban is costing Minnesota's charitable gambling industry $100 million a year in revenue, according to a report that confirmed ban opponents' predictions.

Ban supporters questioned the report.

Charitable gambling organizations in recent years have experienced a steady, 2.5 percent annual decline in gross receipts, Tom Barrett, executive director of the Minnesota Gambling Control Board, told lawmakers Monday. But in the last three months of 2007 -- after the smoking ban went into effect -- receipts dropped 12.8 percent from the same period in 2006. The smoking ban caused 7.5 percent to 8 percent of that drop, Barrett said.

"The decreases are significant," he said. "We anticipate the decrease will continue."

A decline of 7.5 percent to 8 percent of gambling receipts amounts to a drop of $95 million to $105 million, the Gambling Control Board said.

Charity gambling revenue declined from $1.42 billion in 2003 to $1.22 billion in 2007.

Lawmakers and Gov. Tim Pawlenty agreed last year to ban smoking in nearly all public places beginning Oct. 1. Among organizations that fought hardest to keep smoking were bars and service clubs such as Veterans of Foreign Wars facilities, where much of the charitable gambling occurs. They warned that without smoking, they would have less business.

The legislation required a study of the smoking ban's effect on charitable gambling. Barrett reported those findings Monday to the Senate State and Local Government Operations and Oversight Committee.

"Smoking bans appear to cause a permanent drop in lawful gambling," the report concluded.

Minnesota has 1,400 registered charitable gambling organizations operating in 3,000 sites across the state. Gambling benefits groups such as veterans' organizations -- which comprise 29 percent of the industry -- youth sports organizations, fraternal clubs and outdoors groups.

Pull tabs bring in 93 percent of charitable gambling revenue; the rest comes from bingo, raffles and other games.

The results were challenged by supporters of the Freedom to Breathe Act, who said a drop in charitable gambling receipts started before the smoking ban went into effect.

"I'm not arguing that charitable gambling receipts aren't down," said Mike Maguire of the American Cancer Society. "What I am arguing is the Freedom to Breathe law is not the appropriate scapegoat."

The decline should be attributed to a sagging economy, Maguire said.

Indeed, a worsening economy was one of the factors, as were higher gasoline prices and unemployment, Barrett said.

The decline was more severe along Minnesota's border. Gambling sites within five miles of the border experienced overall decreases of 20 percent during the three-month period. None of the states bordering Minnesota has a smoking ban.