The idea that companies “do well by doing good” is behind a proposal that shareholders in three major gaming operators will vote on in coming weeks.
Shareholders of Bally’s, Boyd Gaming, and Caesars Entertainment will be asked to approve measures calling for each company to study the cost saving from instituting a smoke-free policy for all their casino floors. The companies oppose the proposals, which will be presented at annual shareholder meetings in May and June.
Many people, including those with stock in casino corporations, are surprised to learn that smoking is still allowed on many gaming floors, said Cathy Rowan, director of Socially Responsible Investments for Trinity Health.
“Anything we can do on the investment side to promote a healthier environment, we’re going to try,” she said. “We want to bring the resolution publicly to the other investors, partly for education and to get a sense of whether other investors share our concerns.
Trinity Health, based in Livonia, Mich., is among the largest not-for-profit, faith-based, health-care systems in the nation, with 101 hospitals, 126 senior care locations, and operating revenue of $21.6 billion in fiscal 2023. It operates in 27 states and provided $1.5 billion worth of charity care and other community benefits last year.
Several months ago, Trinity Health, the American Nonsmokers’ Rights Foundation, and the Sisters of St. Francis of Philadelphia, an order of Catholic nuns, approached executives at Boyd, Bally’s, Caesars, MGM, Penn, and Churchill Downs about each company undertaking its own study. Discussions with MGM are ongoing and the Sisters of St. Francis hope to raise the issue during a question-and-answer session at the May 1 shareholder meeting, said Tom McCaney, the order’s associate director of corporate social responsibility.
The three organizations are members of the Interfaith Center of Corporate Responsibility, formed in 1971. Its first target was South Africa’s apartheid policies, with the Episcopal Church presenting a shareholder proposal that General Motors withdraw operations from the country. The movement led to large institutions avoiding investment in South Africa and apartheid eventually ended.
“We’re not trying to pick on anybody,” McCaney said. “We want (these companies) to do well by doing good. We try to make the business case for making sustainable decisions.”
Rowan said shareholder advocacy and socially responsible investing are part of Trinity’s mission to promote community health and well being. The organization was active in persuading pharmacy giant CVS to stop selling tobacco products and is working to get other chains to follow suit. It previously worked on movie portrayals of smoking and encouraging fast-food restaurants to ban smoking.
She said Boyd officials have told the group that the company takes the smoking issue seriously, but have not agreed to survey workers or customers about it. Boyd and Caesars separately asked the Securities and Exchange Commission to keep the shareholder proposal from being presented at their annual meetings, with Boyd saying the question was an inappropriate effort to “micromanage” the company. The SEC disagreed and ruled that the question must be put to a vote of shareholders in each company.
The proposals ask company directors to commission and disclose results of a study on the potential cost saving from a smokefree policy, with the stipulation that the report omit confidential data. The resolutions are nonbinding, so a positive vote would not necessarily ensure that a study will be done.
The proposals hold that indoor smoking poses several business risks, including increased employee-health-insurance premiums, higher maintenance costs, and deterring a “significant number” of visitors, given that 88.5 percent of American adults don’t smoke.
Bally’s urges shareholders to reject the “unwarranted and unreasonable” proposal. “Compliance with local smoking laws ensures that customers have access to comparable gaming experiences with all other casinos in each market,” its letter to shareholders says. “The company also maintains policies and procedures to accommodate employees who wish to work in a smoke-free environment.”
In letters to Bally’s and Boyd shareholders posted on the Securities and Exchange Commission website, Rowan says shareholders have no guidance on the financial, social, and environmental costs the companies incur by allowing indoor smoking.
She notes that Bally’s has smokefree casinos in Delaware and Colorado, recently won a bid for a Chicago casino that would have to be smokefree under state law, and is competing for a gaming license in New York City, which also would require a smokefree facility. “Company statements that accommodations made for smoking and non-smoking guests are sufficient would seem to conflict with their desire to expand in more smokefree gaming markets,” the letter says.
Bronson Frick, director of advocacy for ANRF, said he didn’t know of any casino company surveying customers about smoking. “Another business risk is the comorbidity between gambling addiction and smoking addiction.
“There are some concerns around whether targeting smokers is, in essence, a proxy for targeting problem gamblers. More research is needed, but … why is it so important to maintain indoor smoking in a climate of record low smoking rates?”
Shareholder proposals rarely get a majority vote from shareholders, which typically include large percentages of institutional investors and company insiders. Among the country’s 3,000 largest corporations, shareholder proposals received an average of 23 percent support in 2023, down from 31 percent in 2022, according to the Conference Board, a global nonprofit think tank.
Frick and McCaney said a 20 percent vote in favor of the smoking study would be encouraging. “(That) would indicate the issue is something shareholders care about,” Frick said. “We would hope for meaningful dialogue with companies as an outcome.” Rowan said a 5 percent vote in favor would allow the issue to be raised again next year.
“We’re not the enemy,” Frick said. “We want these companies to do well — for shareholders and their workers and their customers.”
