LANSING – While firm numbers are not yet final, indications are that Michigan’s new workplace smoking ban will affect sales of Michigan Lottery club games, especially Keno, and could mean a drop in school funding from those games alone by $10 million.

The executive director of the Michigan Licensed Beverage Association said his members are clearly noting a drop in things like Keno sales as many are seeing less customer traffic since the ban took effect on May 1. The workplace smoking ban also means that except for the Detroit casinos and some locations like cigar clubs, smoking is outlawed in bars and restaurants.

One legislator who helped drive the move to ban smoking said there was no question the ban would have affected things like Keno sales, but that based on the experiences in other states some of that customer traffic should come back. Sen. Raymond Basham (D-Taylor) also said the new requirements may mean local establishments have to change their marketing to draw customers back in.

Andi Brancato, spokesperson for the Michigan Lottery, said indications now are that club game sales for the 2009-10 fiscal year will be some $35 million less than the $548 million the games sold in the 2008-09 fiscal year. Those numbers are unaudited at this time, Brancato said.

A number of factors, including the economy, could play into that drop, but the Lottery Bureau also thinks the smoking ban could be a factor.

A sales drop of $35 million would mean $10 million less in school funding from those games, she said.

Overall, Lottery sales are down about $2 million, or 0.2 percent, from the same time last year, she said. In 2008-09, Lottery sales totaled $2.448 billion. While the state added the Powerball game this year, Lottery sales are affected by jackpots, the economy and other factors, Brancato said.

“We have heard from retailers, and can tell by their sales figures, that their Lottery business has been affected. We continually work with retailers on marketing tools like point of sale placement, asking for the sale, providing special promotions for their players, etc. These are ongoing efforts that are designed to not only increase existing sales, but to maintain them as well,” Brancato said in an email statement.

Lance Binoniemi, executive director of the licensed beverage association, said his members report a drop in Keno sales in the first three months since the ban took effect. There are some indications that food sales may be up, but liquor sales are down, he said.

Last week he sent a survey to 2,500 members asking for information about how sales have gone in the first few months of the ban. But anecdotally he said he is taking about 30 phone calls a week from members, some 500 in all, and just one so far has said business is up since the ban took effect.

Basham said that early drop was expected, and that based on experiences in other states after six months those establishments should start to see traffic pick back up.

Binoniemi said that forecast worries his members because that time frame will be close to winter, when it is unlikely patrons would step outside for a smoke. The winter could be cold for them in terms of business, he said, and a good indication will come soon with the start of the professional football season.

Basham said establishments may have to change their marketing to help draw patrons in. “The Constitution of Michigan says we’re responsible for the health of the public, not for marketing plans,” he said.

Plus, even if there is a short-term loss in Lottery funds, there could be a sales tax gain if restaurants, as opposed to bars and taverns, are seeing more business because of the ban.

And the state should see savings in its Medicaid spending as smoking-related diseases affect fewer people, he said.

This story was provided by Gongwer News Service. To subscribe, click on Gongwer.Com

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