Griggs declined to specify the extent of the downturn in business, but said there's been a major financial impact, both from a bar point of view and from a gaming perspective.

"For some hotels and clubs, the downturn was even more dramatic than it was when the laws were introduced in Victoria, where there was a 30 per cent downturn."

The laws, which came into force on July 4, stipulated that smoking would be allowed in only one room or part of one room of a hotel, which must occupy no more than 50 per cent of the total area of all rooms on the premises.

Mr Griggs said the laws had forced the hotel to make considerable changes in the way it operates.

"We originally made the gaming room available for smokers because we thought there would be complaints if they couldn't smoke while playing," he said.

"It turned out it wasn't what people wanted. We ended up reversing it, making the gaming room non-smoking and making half of the main bar into a smoking area and the other half non-smoking."

Mr Griggs said the changes had been made so the hotel doesn't have to change its set-up again in July 2006, when the regulations stipulate that smoking take place in only 25 per cent of a hotel's area.