Jan. 31 (Bloomberg) -- Ontario may lose as much as C$500 million ($438 million) a year by implementing a smoking ban in casinos because it will drive some smokers to U.S. gambling halls, an Ontario government study said.

The results of the study, commissioned by the Ontario Ministry of Economic Development in 2004, were obtained under a Freedom of Information request by mychoice.ca, a lobby group for Canada's smokers. ``The government has been very careful to keep this information private'' Nancy Daigneault, president of the 25,000- member organization, said in a statement today. The government has ``continued to publicly state that it had no evidence of any serious negative impacts that would result from a ban - and we now know that simply was not true.'' Ontario Finance Minister Dwight Duncan had estimated in November that the provincial deficit for the fiscal year ending March 31 would be C$2.4 billion. Adding C$500 million next year would boost the deficit by 21 percent. ``There is an understanding the smoking ban will have an impact on the gaming industry,'' said Wilson Lee, spokesman at the Ministry of Public Infrastructure Renewal, which is responsible for the provincial casinos. ``The smoking ban needs to be weighed not just in terms of the health impacts but the fiscal impacts on the health system.'' The government study said a ban on smoking at a charity casino in Brantford, Ontario resulted in a 20 percent decline in revenue as people spent less time gambling and more time away from the tables. The decline in attendance was only 2 percent. ``It is clear that casino patrons have decreased their playing time and/or spending while at the casino,'' the study said. Report Release The government was reluctant to release the details of the study because the numbers are preliminary and ``speculative,'' Lee said. ``We need to be circumspect in terms of the information we ultimately share with our competitors, especially those across the border,'' Lee said. Ontario plans to ban smoking in all enclosed public places and workplaces on May 31. That will include the elimination of designated smoking rooms in bars and restaurants as well as the ban on smoking in casinos, bingo halls and private clubs. Ontario has four commercial casinos, six charity casinos and 16 racetracks that have slot machines. Government revenue from gambling, which includes lotteries, was estimated at C$2.3 billion in the last budget. The government has promised to spend more on casino facilities to keep gamblers in the province, including a C$400 million renovation of the Windsor Casino which has already been losing business to casinos in Detroit, across the river. Competition People in Detroit are ``ecstatic'' because ``it's good for their casinos,'' Daigneault said. Smoking is a drain on the government's finances. It costs C$1.7 billion a year to treat diseases directly caused by smoking, Duncan said. Duncan said today provincial taxes on cigarettes would rise by C$1.25 per carton of 200 starting tomorrow, the fourth tax increase on cigarettes since the Liberal Party took power in 2003. A pack of 25 cigarettes, which costs about C$9 in Ontario, will rise an additional 20 cents. The tax increase will add C$35 million to government revenue annually, Duncan's spokesman Sean Hamilton said. To contact the reporter on this story: Joe Schneider in Toronto at [email protected].

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