Smoke-free laws and bar revenues in California - the last call

California was the first state to implement smoke‐free restaurant and bar laws, in 1995 and 1998, respectively. We analyze how these laws affected the distribution of revenues between bars and restaurants. Critics of smoke‐free bar laws have often claimed that a prohibition on smoking reduces bar revenues. Similar claims are made for the effects of smoke‐free restaurant laws. Such claims implicitly assume that a smoke‐free law reduces expenditures by smokers by more than it increases expenditures by non‐smokers. Using tax revenue data from 1990 to 2002, our analysis suggests that the actual effect is just the opposite: the 1995 smoke‐free restaurant law is associated with an increase in restaurant revenues, while the 1998 smoke‐free bar law is associated with an increase in bar revenues. Copyright © 2005 John Wiley & Sons, Ltd.