A smoking ban approved this week by Illinois lawmakers could send gamblers streaming across the state line to Northwest Indiana casinos, industry observers say.

"We anticipate as much as a 20 percent loss in our revenues, especially to the bordering states," Illinois Gaming Association Executive Director Tom Swoik said Wednesday.

Casinos in Indiana, Missouri and Iowa stand to gain gambling business, said Swoik, should Gov. Rod Blagojevich sign the ban into law, making it effective Jan. 1.

The legislation prohibits smoking in bars, restaurants and other public workplaces, including casinos, and has been praised by anti-smoking activists as an important step in protecting people from secondhand smoke.

Historically, casino revenue has dropped in states where smoking bans are instituted, said Rick Mazer, general manager of Horseshoe in Hammond, the closest casino to the Illinois border.

"For those jurisdictions that are close by, this could give them a competitive advantage," Mazer said.

A federal ban would eliminate that form of competition and provide a level playing field, Mazer said. "We have always said the best solution is a federal one."

A smoking ban in Illinois could prove to be only a short-term benefit for Indiana and other border states, said Ed Feigenbaum, editor of Indiana Gaming Insight tracking the state's gambling industry.

"In the long run it may prove to be the catalyst Indiana lawmakers are looking for to justify a smoking ban here," Feigenbaum said.

Eventually, smoking bans could cause "real ardent smokers to push for an end to Internet gambling bans," allowing them to gamble online, and smoke, in their own homes, he said.

An attempt to limit smoking on one Northwest Indiana casino met with little success.

Don Barden, whose Majestic Star LLC owns two casinos in Gary, made one floor of one of the casinos smoke-free in 2006, but soon abandoned the idea.

The nonsmoking floor was something the casino was willing to try but it didn't go over well with customers, Majestic Star spokeswoman Yvette Gawne said.

"In fact the majority of our guests are smokers," Gawne said. "In order to meet their needs, we changed the floor back to smoking."

The Illinois smoking ban would become effective about the same time highway construction finishes on the Dan Ryan expressway, easing the traffic flow between Chicago and Northwest Indiana, said John Busam, editor of Midwest Gaming & Travel.

"If the governor signs that bill, after Jan. 1 I'd much rather own a casino in Indiana than in Chicagoland," Busam said.