NIAGARA FALLS, Ont. - Just beneath the cheery din of slot-machine sirens, the sound of blissed-out tourist traffic and the crash of Niagara Falls, an undercurrent of anxiety is flowing among merchants and attraction operators as they brace for what some fear could be a summer of discontent.

As of June 1, those who make their livelihoods serving visitors on the Canadian side of the border will be contending with strict new rules that require anyone entering the United States to carry a passport - including returning American tourists.

The fear is that incoming U.S. traffic will dwindle and the southern Ontario city's tourism industry will take a beating as a result.

"It's going to hurt everywhere," said Hanif Nanji, owner of a Cuban cigar shop and currency exchange in the heart of tourism central - the neon-lit Clifton Hill, where American customers jam his store to buy products they can't get at home.

"By the time they (obtain) their passports and everything, I have a feeling the summer is going to pass by. And that's going to hurt my revenue quite a lot."

Indeed, Nanji's fellow shopkeepers, restaurateurs, hoteliers and attraction operators agree they may soon face the challenge of generating new business to compensate for a dearth of American dollars.

"The thought around here is it could be a generation before (for) U.S. citizens, it becomes a fact of life that they would just need to get a passport to travel,"said Tim Ruddy, who works on the Maid of the Mist boat tours that ply the waters below the Falls.

Calling the situation "dire," Ruddy said U.S-based tour operators tell him they're expecting a significant drop in clients - and were filling their buses in the months leading up to June in an effort to cushion the blow.

"We certainly don't expect a record-breaking tourist season for Niagara," said Greg Medulun, who speaks for Fallsview Casino Resort and Casino Niagara, two light-studded gambling behemoths that overlook the Falls and typically draw huge crowds.

Still, it's businesses catering to drive-in day trippers - the ubiquitous fun houses, wax museums and attractions like the iconic Skylon Tower with its revolving restaurant - that may be hardest hit. Even the wedding chapels are exploring new ways to promote their lightning-quick nuptials.

Despite the "beautiful sights" and Canadian candy bars, "I don't think we'd have come today if we didn't have a passport," said Derek Everitt of Utah, gesturing to his group of eight family members.

Still others conceded they had none, and were in Niagara Falls for one last visit before the passport rule kicks in Monday. Scrambling up Clifton Hill with his wife and four tiny children to a 3-D movie ride, Mike Brayton of Michigan called the visit their "last hoorah into Canada."

"We're just taking advantage of coming over here one more time before the passports change, because I don't know if we'll spend another $400 for us to all come," said Brayton's wife, Anne.

Mike Bowser, visiting with his young family from Ohio, agreed the requirements go too far, and that many Americans will forgo crossing the border as a result.

"There's two perspectives of the Falls," he said. "They're going to be missing the best one of them."

While the new rules takes effect Monday, many in the industry said they first noticed a tourist decline starting a few years back, when the U.S. Western Hemisphere Travel Initiative - the official name for the new security measure - was first announced.

Businesses in Niagara Falls noticed a decline during last week's Memorial Day weekend of as much as 10 per cent.

Patrick Clary of Hoco Entertainment and Resorts, which runs a slew of venues including a fudge shop, nightclub and mini golf, said while he understands the need for security, he figures there must be better ways to screen potential threats.

"From a profiling point of view, I wouldn't be too worried about a grandmother from Pennsylvania," he said.

But he and others do need to gain perspective, Clary admitted.

"One day it'll just be the normal way to travel and everybody will think nothing of it - we've just got to go through the pain until we reach that."