The Borgata will also do a massive renovation of its 2,000 hotel rooms this fall at a cost of "tens of millions of dollars," president Larry Mullin told The Associated Press Wednesday.
"It will be very nice looking," Mullin said of the lounges, adding that they will cost several million dollars to build. "We also think it will be very popular with our employees."
The outdoor smoking areas won't require a ventilation system like an indoor smoking lounge would, and will be heated in the winter months to keep smokers comfortable, Mullin said.
Smoking will still be permitted in some hotel rooms.
The City Council passed a total smoking ban on the gambling floor of all 11 casinos on April 23. The law permits casinos to build lounges where patrons could smoke but not gamble.
It replaces a compromise enacted last year that restricts smoking to no more than 25 percent of the casino floor.
Mayor Scott Evans signed the new smoking law at a ceremony Wednesday afternoon. It will take effect Oct. 15.
The Borgata will also undertake another, more far-reaching project this fall, embarking on a renovation of all 2,000 of its hotel rooms. The work will come just five years after the Borgata opened in 2003; it is still the newest casino in the city.
"We are running almost sold-out every day," Mullin said.
"These places can get beat up pretty quickly, so we want to keep everything fresh."
The two-year project will update decor and furniture in all the Borgata's hotel rooms and common areas.
Mullin said part of the impetus behind the renovation is the wave of new casino-hotel projects planned for Atlantic City over the next five years or so. Borgata, which has been the dominant, top-of-the-market property since it opened, will face competition from as many as four new casino-hotel projects all using the Borgata as their measuring stick, he added.
The $5 billion MGM Atlantic City development next to the Borgata, and $2 billion apiece Boardwalk projects planed by Revel Entertainment, Pinnacle Entertainment and hotel developer Curtis Bashaw and casino executive Wallace Barr will give Borgata its first real competition.
"We are what they are shooting to become, at a minimum," he said. "So having a beautiful property and keeping it fresh is what will be the differentiation in this market."
