You'd think casino operators have enough worries with depressed consumer spending and high debt levels. You'd be wrong.

Add smoking bans to the list of woes cited that gambling companies say are cutting into revenue and creating uncertainty.

SEC filings of companies like Ameristar Casinos, Penn National Gaming (NASDAQ:PENN), and Isle of Capri Casinos claim revenue damage from existing laws and warn about future impacts from legislation under consideration.

Here's a typical comment from Penn National. Anti-smoking legislation "appears to be gaining momentum" in states where the company has, or plans to establish, gambling properties, says a recent 10-Q statement. The Penn National filing refers to laws in Colorado, Pennsylvania, and Illinois, plus proposals in other states. If more bans are enacted, "our business could be adversely affected."

Measuring the effect
Casino companies designate tobacco legislation in the risk-factors section of their reports to the SEC -- right up there with warnings about acts of God, dangers of debt, concentration of share ownership, and the recession.

The American Gaming Association, an industry trade group, says consumer spending on commercial casinos dropped last year for the first time since it began compiling data in 1999. Along with the recession and gas prices, AGA cited smoking bans in some states as causing the decline to $32.54 billion from $34.13 billion.

Smoking bans will have a greater effect on small, privately owned casinos. Large public and private operators with many properties spread over many states -- or countries -- can better absorb the impact from the smoking bans.

However, anti-smoking laws underscore the fragility of casino revenue, especially when it comes to matching quarterly results to analysts' expectations. Any earnings surprise, or even a modest miss can send a stock skidding in this climate.

Taking a hit
It might seem like a stretch to say that what's good for Altria Group (NYSE:MO) and Lorillard (NYSE:LO), is good for Las Vegas Sands (NYSE:LVS) and Wynn Resorts (NASDAQ:WYNN). Yet some independent research indicates that casinos aren't just blowing smoke when they complain about tobacco bans.

An analysis by two economists at the Federal Reserve Bank of St. Louis says that the first 12 months of the Illinois smoking ban caused "significant downturns" in attendance and revenue at Illinois casinos.

They compared Illinois gambling to casinos in Missouri, Indiana, and Iowa, which didn't ban smoking. They controlled their research for the impact of other factors. They estimated that the Illinois law caused a $400 million drop in revenue in 2008 at nine casinos -- down 20% to 22% from 2007 -- and a 12.3% decline in admissions. Major players in Illinois include Penn National, Harrah's Entertainment, and Boyd Gaming (NYSE:BYD).

Debating the impact
Smoking bans raise many questions about economic impact, including questions about how data is analyzed.

Four years ago, researchers at the University of California at San Francisco issued a report saying that a Delaware smoking ban enacted in late 2002 didn't affect total revenue or revenue per slot machine at three "racinos" -- racetracks that have slot machines.

However, one St. Louis Fed economist argues that their research contained data errors. His analysis showed that the law caused a "significant decline" in racino revenue.

And although a casino may be hurt after a smoking ban is imposed, do customers stay away forever? Does new competition within a state, or from another state, play a bigger role in a casino's decline in attendance and revenue?

Exceptions, changes, revisions
Even when a law is enacted, it can have loopholes, be amended, or be inadequately enforced.

In New Jersey, there's a partial smoking ban on 75% of gambling floor space in casinos owned by companies such as Harrah's Entertainment, Trump Entertainment, MGM Mirage (NYSE:MGM), and Boyd Gaming. The partial ban is due to a 2007 Atlantic City ordinance, which is based on a 2006 state anti-smoking law.

In April 2008, the Atlantic City council voted to ban all smoking in all casinos, but in October 2008, it voted to delay the total ban for at least 12 months.

New Jersey casinos continue complaining. Harrah's recently blamed second-quarter and half-year drops in revenue versus year-ago periods on the recession, competition from neighboring states, and "smoking restrictions in Atlantic City."

Lighting up your portfolio
Casino operators insist that public health legislation creates uncertainty. Investors must decide for themselves.

Although I doubt anyone intent on investing in gambling will vote yes or no solely on smoking bans, you can't deny that there's a balancing act of risk and reward.

On the one hand, you have public health experts armed with medical data about the dangers of smoking and second-hand smoke. On the other hand, you have the restaurant, tavern, casino, and tourism industries -- plus their lobbyists -- decrying the economic impact of smoking bans. You also have politicians frantically scrambling to balance budgets amidst a recession.

If you agree with the latter group, there are many other gambling-industry woes to affect your investment decisions.

If you believe the public health advocates will prevail and casino operators' worst fears will materialize, then maybe casino stocks aren't your play.

Fool contributor Robert Steyer doesn't own shares of any companies cited in this story. Ameristar Casinos is a Motley Fool Hidden Gems recommendation. The Fool has a disclosure policy.