Dolphins are an interesting character and lack olfactory receptors (interestingly enough, the olfactory tract and bulb only exist in the fetal stage of development) therefore, it is true that dolphins do not have a sense of smell.
However though they lack in this department, it should not be assumed that they are not efficient in their other senses. In fact they have acute eyesight both in and out of water and they can hear frequencies ten times or more above the upper limit of adult human hearing. A dolphin’s sense of touch is also well developed, with free nerve-endings densely packed into the skin, especially around the snout, pectoral fins and genital area.
Something that is also very interesting is the fact that although dolphins lack a sense of smell, they do not lack a sense of taste as a result of not being able to smell. They also show preferences to certain kinds of fish opposed to others. Since dolphins spend most of their time underwater, tasting the water can function as smelling in that substances in the water can signal the presence of objects that are not in the dolphin’s mouth.