Cigarette smoking in bars and restaurants poses a definite health hazard and results in substantial damage to the facilities’ interiors. The consequences resulting from tar, nicotine, smoke and lingering offensive odors usually requires the complete gutting of the bar/restaurant inside to repair the damage; in addition, loss of employee services while ill from exposure to cigarette smoke is another hazard, not to mention medical problems caused patrons. I believe the reluctance to ban smoking in Nevada bars revolves around the fear that it may decrease revenues; however, a study has found otherwise.
The European Journal of Health Economics
Do smoke-free laws affect revenues in pubs and restaurants? http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3249552/
In many countries, the propagation of smoke-free air policies has been slowed by fears that restrictions on smoking may have a negative impact on businesses . The most vigorous debate has revolved around the business activity of pubs and restaurants . Debates centre on the claim that there will be a loss of revenue as a result of smokers visiting these establishments less frequently, cutting their visits shorter and spending less money than they otherwise would if smoking were permitted. Against this, it is argued that the premise that smokers would change their habits is wrong or that even if some smokers reduce their visits, it could be balanced by non-smokers increasing their visits. An extensive and growing body of literature on the economic impact of smoke-free policies in the hospitality sector shows that smoke-free air policies have no economic impact on restaurants, pubs and other segments of the hospitality industry [3, 4], with the possible exception of gaming establishments [5, 6]. However, most of this research has been conducted in regions of the world with a climate less hostile to outdoor smoking than the cold and wet Norwegian climate. In addition, many studies have also been limited to a short time period after the law was introduced, and few studies have had the data to compare and analyze the effects for restaurants and bars separately. This article contributes to the existing literature by examining the long-term effects of the law on smoke-free environments separately on the revenues of pubs and restaurants in a geographical region with a cold climate.
The smoke-free law came into effect on 1 June 2004. The results from a comprehensive evaluation show that the introduction of the smoke-free law was followed by a reduction in airborne nicotine and total dust in pubs and restaurants, and a decline in urinary cotinine levels in non-smoking hospitality workers . Service workers were also observed to have increased lung function , a decline in respiratory symptoms  and better self-reported respiratory health . Hospitality workers found a total ban easier to enforce than the previous partial ban and patrons reported better air quality, increased well-being and high and increasing—especially among smokers—support for the law . Population-based consumer surveys showed no significant changes in the frequency of pub/bar and restaurant visits following the implementation of the law .
However, until now, no methodologically sound study has been conducted in Norway using valid, reliable measures of business activity covering the period before and after the implementation in order to separate the economic impact of the law from underlying economic trends and to allow sufficient time for businesses, smokers and non-smokers to adapt their behavior to the policy. With half of the country situated north of the Arctic Circle and the remaining parts also regularly exposed to cold winters and rainy summers, Norwegian smokers might be expected to be more affected by a law against indoor smoking than smokers living in more temperate climes. Business owners and hospitality associations therefore expressed concern when advocates of the law extrapolated evidence from research conducted in the USA and Australia and applied it to Norway. With 36% regular smokers (27% daily and 9% occasionally) at the time of implementation, Norway also had higher prevalence of smokers than most countries with such policies. We therefore hypothesized that the smoke-free law would have a larger economic impact in Norway compared to the lack of impact reported in the scientific literature on the topic.
Our results indicate that smoke-free laws do not affect restaurant revenue directly or as a share of private consumption even in a country known for its harsh climate. There is some evidence for a short-run effect on pub revenue as a share of private consumption, but there is no evidence of a short-run effect on the absolute level of pub revenue and no evidence for a long-run effect using either measure.