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Wall
Street Journal
By PETER SANDERS
October 5, 2006
In June, an elderly
blackjack player on a hot streak at the Wynn Las Vegas
casino decided to share his good fortune. Up more
than $1 million in winnings at one point, according to
people in the know, the 79-year-old Texan went on an
equally impressive tipping spree with dealers and cocktail
waitresses. By the time he quit playing at 6 a.m., the
tips totaled more than $450,000.
The unidentified man's
generosity excited the Wynn casino's staff that night, and
for good reason: The dealers' tips were split among the
casino's 580 dealers, the customary arrangement in Las
Vegas gambling establishments.
But, at Wynn, the system
has now abruptly changed. In August, Steve Wynn, the CEO
of Wynn Resorts Ltd., decreed that, in the case of
dealers, the coveted tip pool will now be expanded to
include about 220 of their supervisors. The move, the
company says, is meant to correct a strange inequity in
the casino workplace: Thanks to tips, dealers make
thousands of dollars more than some of their bosses do.
The luxurious $2.7
billion Wynn Las Vegas casino, which opened in April 2005,
is the world's most expensive casino resort. A Las Vegas
legend, Mr. Wynn previously developed the Mirage, the
Bellagio and the pirate-theme casino originally called
Treasure Island.
According to people who
attended Mr. Wynn's recent meetings with dealers, he
angrily accused the employees of "mugging" his players and
pointedly referred to the June tipping binge. A Wynn
Resorts spokeswoman said in a statement that Mr. Wynn was
simply reinforcing the idea that employees have "a
responsibility to service the guests without being
solicitous."
The company maintains
that, with tips included, its dealers average close to
$100,000 per year in wages. (Dealers say it's closer to
$88,000.) Their supervisors typically make far less --
between $50,000 and $60,000 annually, according to Wynn
Resorts.
Bringing supervisors into
the tip pool means that dealers' income will drop, though
it isn't clear how much. Wynn Resorts says the drop would
be 10%, while dealers contend it will be closer to 15% or
20%. Managers would see their pay jump to about $95,000
annually with new tip income factored in, the company
says.
The 64-year-old Mr. Wynn
and his lieutenants have said the change was necessary to
hire and retain casino supervisors. Andrew Pascal, Wynn
Las Vegas's president and Mr. Wynn's nephew, said in an
interview that there is little incentive for supervisors
to stick to a management career track, "when they look at
the people they're managing and realize how much more
they're making."
Mr. Wynn declined to
comment and through a spokeswoman referred questions to
Mr. Pascal. The Wynn spokeswoman and Mr. Pascal both
declined to comment on "matters that relate to the
activities of our guests or employees." But the
spokeswoman said that no incident at the casino had
provoked the change in the tip policy.
In the days following Mr.
Wynn's announcement, Internet sites frequented by casino
dealers -- casinodealers.net and dicedealer.com -- were
abuzz with the news and vitriol. Longtime dealers who left
good jobs at rival casinos like Caesars Palace and
Bellagio felt slighted by Mr. Wynn. Many said they had
gone to work at Wynn Las Vegas specifically because of the
chance to earn more money.
Wynn Las Vegas hotel and
casino. Dealers have been hesitant to speak out. They fear
losing their jobs and hurting chances for future
employment. Unlike thousands of service employees at many
Las Vegas casinos, dealers in Las Vegas are not protected
by labor unions.
Historically, casino
dealers have lived off their tips, or "tokes," as in
"tokens of gratitude." Years ago, they shared the tips
they made at their tables with the guys they worked with
at those tables. That benefited dealers working peak hours
and fostered competition for tips. It also put pressure on
players to tip dealers, who cultivated gamblers in much
the way bartenders do their good customers.
"At a casino where it was
'pit-for-pit,' the dealers definitely muscled players to
tip, and, if they didn't, they were made to feel unwelcome
at the table and in the casino," says Jim Kilby, professor
of gaming at the University of Nevada, Las Vegas, and a
former dealer.
In the late 1980s, Mr.
Wynn -- then the head of Mirage Resorts Inc. -- pioneered
a big change that soon became the Vegas norm. He tweaked
the system to combine the tips from the blackjack,
roulette, craps and baccarat dealers into one pot. The new
arrangement was "by far the most equitable thing to do,"
says Mr. Kilby.
As a result, the modern
toke is no longer cash in the envelope at the end of a
shift, but taxable income that appears on a paycheck every
two weeks. At most casinos, the dealers collect the money
themselves under the auspices of a "toke committee." At
Wynn Las Vegas, the committee members collected the day's
tips from the casino floor at 4 a.m., then counted the
money and presented the results to the casino cashier for
verification, according to Mr. Pascal and the "Wynn Las
Vegas Table Game Operations Dealer Department Handbook."
The money was then paid as part of each dealer's paycheck,
supplementing their nominal $6.15 per hour wages.
But now, the task of
gathering and counting the daily toke is in the hands of
management. The casino's security staff collects the daily
tips and counts the money behind closed doors, according
to a revised copy of the Handbook issued last month. The
company said it will make available DVDs, taken off casino
security cameras, for any dealers who want to review the
daily count.
In the weeks after the
tip policy was modified, more than 100 anonymous
complaints flooded Nevada's labor board, alleging the
abrupt move violated state labor laws. After a quick
review of the situation, Commissioner Michael Tanchek said
that he himself had been taken aback by the move. But
"when we looked into it, we found they weren't doing
anything illegal in terms of state law," Mr. Tanchek said.
Two dealers -- Joseph
Cesarz and Daniel Baldonado -- have filed a lawsuit in
Nevada state court seeking class-action status in an
attempt to recoup wages lost to the new arrangement. "When
I walked out of that meeting, my heart just broke because
he was taking money from us to pay his managers," said Mr.
Cesarz, a 36-year-old craps dealer at the casino,
referring to Mr. Wynn. "The company needs to start paying
the right salaries to the managers and if it has to be
more than the dealers are making, so be it," he said,
adding, "We're paying for Wynn's mistakes."
The suit claims Wynn
Resorts violated state laws that dictate how employers can
modify tip-pooling arrangements. "These are laws designed
to prevent tip sharing by people who weren't in the chain
of service," says Mark Thierman, a Reno, Nev., attorney
representing dealers in the suit. "It's almost a conflict
of interest to be tipping your own boss, the person who is
supposed to catch you making mistakes and reprimand you."
A big question in the
casino industry is whether rivals will adopt Mr. Wynn's
move. A spokesman for Harrah's Entertainment Inc., the
world's largest casino operator by revenue, said, "We
don't have any plans to change our system, but we will
look at what happens there."
MGM Mirage said it has no
plans to change the current system, which excludes
managers from the tip pool.
Write to Peter Sanders at
peter.sanders@wsj.com
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