Lincoln’s bars and restaurants have cleaner air, but they’re also in many cases losing money. That was the gist of a report issued by Tobacco Free Lincoln.

The group reported that Lincoln’s smoking ban, now two years old, has made the air in Lincoln bars 96 percent cleaner than that in comparable Omaha establishments.

“The smoke-free Lincoln law is a tremendous success,” said Cindy Jeffrey, executive director of Health Education Inc.

Also, according to the group, people enjoy having smoke-free bars in Lincoln and most people continue to go to those bars.

In August 2005, 91.4 percent of adults surveyed in Lincoln agreed with the following statement: “Restaurants and bars in Lincoln are healthier for customers and employees now that they are smoke-free.”

The same survey found that 84.6 percent of people said they go to bars in Lincoln as often or more often than they did before Jan. 1, 2005.

Despite those pronouncements, the group did release information from a University of Nebraska-Lincoln study showing there have been significant negative economic effects related to the ban.

The study done by UNL’s Bureau of Business Research showed that Lincoln’s keno receipts plunged in the year after the ban became law, with an average monthly loss of $376,000. In contrast, Waverly and Denton, where smoking is still allowed in bars and restaurants, saw monthly keno gains of $70,000 to $80,000 each.

That is in the ballpark with what Big Red Keno has seen, said Bill Harvey, the company’s general counsel.

Harvey said keno receipts in Lincoln grew every year from 1992 to 2004, despite the opening of casinos in Council Bluffs and a fire at the company’s main Lincoln location.

But Big Red apparently met its match in the smoking ban — keno receipts declined 19 percent in 2005.

“The smoking ban had a substantial effect on our keno game, and there’s really no other explanation,” Harvey said.

The UNL study showed a drop in keno receipts wasn’t the only economic effect of the smoking ban. Lincoln’s bars lost $170,000 worth of business monthly in 2005, which translated to $2,500 monthly in lost sales tax, the study said.

That didn’t come as a surprise to bar owners.

Jack Gross, owner of Duggan’s Pub, said business at bars is down 25 percent, and he blamed the lost keno and sales tax revenue for contributing to the city’s $9 million budget shortfall.

Gross admitted some bars have been able to adjust and come back, but it’s “very, very few.”

One of those is Brewsky’s, which, despite taking a hit on keno and liquor sales, has been able to make up for it with cuts and some price increases on food at its two locations, owner Brian Kitten said.

Still, Kitten said, he’s no fan of the ban.

“It’s not been a fun process,” he said.

Eric Thompson, director of the Bureau of Business Research, said situations like those at Duggan’s and Brewsky’s are to be expected.

“We know regulation has an effect on business,” he said. “On the other hand, people pursue the regulation for a reason.”

One of those reasons was cleaner air for bar and restaurant patrons and employees.

“The people of Lincoln voted in November 2004 for clean air,” said Jeffrey. “We accomplished clean air and more. Now we have smoke-free air in indoor worksites, fewer people are smoking, and more are choosing to make their homes smoke-free.”

Reach Matt Olberding at 473-2647 or molberding@journalstar.com.