Revenue at Colorado casinos fell 10.7 percent during the beginning of 2008, the worst drop in the industry's history.
The industry and gamblers are blaming the state's new smoking ban as well as high gas prices. Others blame the overall soft economy.
An analysis by The Denver Post shows that the 10.7 drop in revenue between January and April this year is the second-largest drop among gaming states. Only Illinois saw a bigger drop in revenue. Like Colorado, it banned smoking inside casinos starting in January.
Sales of lottery tickets including Powerball, meanwhile, rose 9.8 percent during the first four months of 2008 compared with the same period last year.
"The industry is experiencing its version of the perfect storm," said Don Burmania, a spokesman for the Colorado Division of Gaming. "How much each factor has contributed to the decline is difficult, if not impossible, to quantify."
Until now, the worst four-month drop for Colorado casinos came in 2003 when revenue fell 5.5 percent between February and May partly due to the blizzard that hit the state in March.
Marc Murphy, co-general manager of Bronco Billy's Casino in Cripple Creek, blames the casino smoking ban for 75 percent of the latest downturn. He said he has cut about a dozen positions since the beginning of the year.
Stephanie Steinberg, who pushed for the smoking ban to be expanded to casinos, thinks the recession is more to blame. She said casino revenue in Las Vegas, where smoking is allowed, has also dropped.
Gamblers say the smoking ban and gas prices have caused them to scale back trips to the three historic mountain towns where gambling is allowed -- Cripple Creek, Black Hawk and Central City.
"I used to come up here once every week. Now it's once every three months or so," said Julie Romero, 60, during a smoking break outside the Isle of Capri. "I just like to smoke while I play the machines."
Paul Williams, 48, of Denver, said he used to go to casinos twice a week but now he only goes tree times a month.
"It's the gas prices," he said. "The gas prices are affecting everything."
The gambling industry is backing a ballot initiative that could boost business by opening the door to higher bet limits and 24-hour gambling. Casinos hope to put the issue before voters in the fall's election.
Many Colorado casinos opposed the smoking ban, which went into effect in January this year.
At the time, some gamers told 7NEWS they would stop coming when the ban took effect.
"I think it's a nice punishment for all us terrible smokers, putting us outside where we're going to get pneumonia and die," said Glenna Hess.
Proponents of the ban say it protects the health of the public.
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