Feel free to adjust the likelihood appropriately. In your case it's very small. I'm ignorant to the reporting practices of various states.

What do you mean "paying extra"?

Your argument seems to imply that if the 10% (which is higher than the actual number) that do not tip suddenly began to tip, the 90% would "pay less" than they now do.

Similarly, you seem to imply that if suddenly 20% did not tip, the other 80% would somehow pay more than they do now.

Becuase even though its our money it "feels" like free money. Probably a little peer pressure too. To be fair though, I have never hit a jackpot. Only high hands. I might have a harder time forking over 10% of a bad beat. But I still think I would

Well, wages are usually sticky, so if the 10% (or 5% if you prefer) who don't tip suddenly began tipping, it would just constitute a pay raise for the dealer. However, if that increase in the amount of tips collected by the dealers continued, I would expect one or more of several things to become more likely over the next few years.

1) The casino would pay the dealers less (or increase pay more slowly).
2) The rake would go down (or increase more slowly).
3) The comps would go up.
4) The quality of the dealers would increase (because of more competition for their jobs).
5) The quality of the poker room would increase (more TVs, newer tables, etc.).

My view is that the amount that people are expected to tip very roughly corresponds to the amount that dealers expect to be paid. So if less people tipped, then those who do tip would have to pay more in order to maintain the current level of service. If they are willing to accept a lower level of service for the same price they were paying before, then they won't tip more. Note, when I talk about a lower level of service, I'm not just talking about shirkers like devilhatesaloser, but rather that the more that dealers get paid, the wider the pool of people the casino can pick from, and so the higher the average quality of the dealer.

Of course, it is also the case that as more players stop tipping, it creates a greater incentive for those who are tipping to also stop, and so if the percentage of non-tippers rose to 20, it is very possible that it could snowball and then the casino would be forced to increase their dealer's wages more directly, which would probably lead to a higher rake.

Nope.

Nah

Uh-uh


All of the above only happens when the mgmt feels the heat from competition or believes it will increase their own margins by attracting more business. Nothing to do w/ tips.

Simply asserting that I'm wrong doesn't really tell me much. Here's my assumption: poker rooms are subject to the ordinary rules of economics. That means that I think the labor market for poker dealers is reasonably efficient. If it is reasonably efficient, then increasing or decreasing how much poker dealers are paid will affect either how much the players pay for the poker "product," or the quality of the product sold (in this case, the quality of the service provided).

If you think that I am wrong, then you need to show why my assumption is false. Simply telling me that it doesn't "match reality" isn't very helpful. The Palimax actually floated a viable reason when he suggested that poker rooms aren't very sensitive to expenses because their purpose is primarily to bring in degen gamblers who lose money elsewhere. But you are giving me no reason at all to think that my argument is incorrect.

You are relying on economic principles which are sound, but you are selectively applying them here while ignoring other, larger principles which are also at work here.

Your claim that casinos would increase the rake to compensate dealers for stiffs isn't necessarily wrong, but isn't very clear. To clarify:

Over an extended period of time, players would need to reduce or completely eliminate tipping to the point that the expected hourly rate for dealing drops significantly. The drop would have to be big enough to convince a large portion of the employee pool that dealing is no longer worth their time. Once the employee pool is reduced to the point that casinos are losing money by being unable to open otherwise profitable tables, they will increase the hourly wage until they are able to attract enough dealers to maximize the room's profitability. They likely would increase the rake, but only so long as the increased rake does not decrease player demand enough to impact the room's profitability.

Even if it is as simple as this and we ignore all other forces at work, this is not a fast process. It would likely take years before the dealers realize the drop in their hourly rates and the applicant pool drops accordingly. Most rooms over-staff as a precaution, and it would take a severe decline in their employee pool before they reach the point where they need to increase the rake. In very competitive markets like LA and Vegas, they will be especially hesitant to do so.

I think the most important thing that you are ignoring here is basic supply-and-demand. Dealer supply greatly exceeds demand. As has already been pointed out, the market has adjusted to this over-supply by lowering the wage. Thanks to minimum wage laws we can't find the true market rate for a dealing position, but I suspect it is much less than what we currently have. I believe that casinos would fill all their slots even if they paid nothing and were able to leave tips as the sole source of income. It might even be less than zero. Strippers routinely make nothing at all from the clubs they work in, many even pay nightly house fees for the privilege of being able to work the room and earn tips. Could this work in casinos?

In any case, demand currently greatly exceeds supply. The reality of your scenario is that dealers whose wage decreases as a result of stiffing will be replaced many times over by new hires willing to work for less before casinos reach the point of needing to pay them more. Lecturing players who don't tip for hurting you through increased rake is about as realistic as telling someone not to pee in the ocean because they might someday drink that water.

I did.

Bingo

But I don't absolutely agree with this. I'm guessing you understand this, but it's worth noting for the thread that this process is all dependent on how quickly and totally cessation of tipping happens. If all tipping ceased abruptly, you'd see a response within a quarter or two imo.

Typo?

I think I should revise my claim to include alternative ways of the casino lowering or increasing expenses and income than just increasing the rake. So, the result of not tipping is felt by other players either in decreased quality of service or general experience or in increased expenses.

I think these scenarios about increases or decreases in tipping are interesting, but I am actually talking about the status quo. So issues of wage stickiness, etc. that would be relevant to changes in tipping practice don't actually apply. Remember that my original claim was that the expense of dealing to free-riders is already priced into the cost of running a poker room, so my point is that as a tipping poker player I'm already subsidizing those who don't tip.

I think the same consideration I pointed out above apply here. I feel like the point I'm making here should be a fairly uncontroversial one. People who don't tip are free-riders, and generally speaking the people who are most hurt by free-riders are those who pay for the service used by the free-rider, not those who provide the service.

I assume that dealers are getting paid what the market will bear and so they don't really have much ground on which to complain about non-tippers, whereas those of us who do tip end up paying more for dealers than non-tippers. I don't tip because I want to give my money to the dealer, I do so because I recognize it as a requirement for having a dealer in the first place.

Honestly, I don't know enough about the market for dealers to do more than speculate here. It is true that unemployment is high (especially in Nevada), so my guess is that dealer's wages are probably above the market level right now. However, that is a fairly recent phenomenon--I am not sure how well tipping payment models respond to economic downturns, so I can't really say anything more on that issue.

However, I still find the claim that dealers are overpaid because of minimum wage laws to be unconvincing. It would be very easy to move to a system where the floor takes a percentage of dealer tips, or gets rid of the tip system entirely and just pays dealers a fixed wage. If dealers are really so overpaid, then why aren't poker rooms doing this?

Sure, what you are describing here is a decrease in service quality as a result of some people not tipping. Higher wages always leads to more competition, which leads to a better quality workforce.

Anyway, thanks for the thoughtful critique.

Okay, since it wasn't clear to you above, let me explain why this doesn't address my argument. If casino management could slash dealer pay by a third without a significant decrease in quality (i.e. without bringing in less business), then that would obviously increase their margins. A decrease in dealer tips of $10/hour would constitute at least that much of a pay cut. If the labor market for dealers is reasonably efficient, then casinos would take advantage of this inefficiency by cutting dealer pay. Since they are not in fact doing so, unless you can show me a reason to think otherwise, this suggests that casinos cannot greatly increase their margins by slashing dealer pay. Thus, if the players start tipping $10/hour less, the marginal profit of the poker room would be affected and management would react according (whether by charging more, hiring lower quality dealers, removing amenities or comps, etc).

The mistake that a lot of people in this thread seem to be making is thinking that somehow when you tip the dealer it is a transaction that is solely between the player and the dealer. It's not. The dealer is in effect "licensed" to receive tips by the casino, and it can revoke that license any time it wants to or use a different payment model.

That is evident by your posts.

About a year and a half ago a local casino made changes in the working conditions for poker dealers.
Dealers began to average roughly $50 a shift less in tokes. Dealers quit? Dealers protest? Dealers demand more base pay? Nope.

Fair enough. If it is your view that dealers are currently significantly overpaid, but that casinos don't care enough about money to bother paying them less, I'm not sure how I could convince you otherwise.

The only reason casinos do not pay less is because it is against the law.

And as I pointed out above, in the real world, dealers losing $50 a shift happens and the house is the cause.

Your argument that if dealers made $10 an hour less in tokes, the casino would have to pay them $10 more in base salary is laughable.

And notice that none of the dealers or the "stiffs are scum" crowd have come to your defense. Because they now about real casinos. And they know your arguments don't hold water.

1. Please show where I said that they are overpaid. You can't.

2. I don't know how to make you understand about state and federal minimum wage laws. I guess you haven't gotten to that class yet.

I forgot to address this earlier so I'm glad you brought it up again. I think the casinos would absolutely pay less if they could, but can't pay less than the minimum wage. I see two ways to work around it:

1. Fight to get the minimum wage lowered or get an exemption made specifically for poker dealers. I expect that this avenue is likely considered every year. The cost of developing legislation, bribing politicians, etc. probably outweighs the expected savings that they would get from reducing the wage. In many areas this would only be about a $3/hour savings even if they went all the way to $0. In Vegas, where the minimum is $8.25, the savings could be much more. I'm honestly surprised that this hasn't been done yet. I don't know how difficult it is to get legislation like that passed but I find it strange that we haven't heard of any attempts.

2. Confiscate dealer tips. The negative publicity and potential lawsuits (it could be viewed as outright theft) are likely enough to stop any casino from trying this. Wynn Las Vegas is currently being sued by dealers (table games) who were forced to share their tips with floor people, I can only imagine what would happen if Wynn just added it to the casino's bottom line.

Remember, I'm dealing in economics and you're dealing with "reality." So by "overpaid," I don't mean that they are overpaid in some moral sense, but just that they are being paid above the market rate. If you could fire your dealers and hire new dealers who are just as good at 2/3 the salary of the previous dealers, then the previous dealers were being paid above the market rate. Alternatively, if you can cut the pay of your currently dealers without them quitting or lowering productivity, then they are currently being paid above the market rate.

You claimed that if the dealer's pay was cut significantly by lower tips that they wouldn't leave (and presumably that productivity wouldn't be lowered). Hence, you think they are overpaid.

Dealers are paid through a combination of wages and tips. Obviously the casino can't pay them below the minimum wage (a bit of charity on your part might help you realize that I'm not saying this). However, the casino can cut the percentage of tips that the dealer takes home--which would be a pay cut.

Huh? You can define "overpaid" as "taking home more than what would make him quit", but that would be your own, personal definition.

State one major casino that can do that.

Interesting. Obviously this weakens my argument as it indicates that in fact some casinos (and some of the best run ones at that) do think that dealers are overpaid.

Your posts concerning this have been admittedly hard to follow. Whether the blame lies with you or me, I'll leave to the jury to decide.

In any case I think I now understand what you're getting at; and you're incorrect. You're incorrect because you are basing your logic on the false assumptions/premises that (correct me if I'm wrong) paying dealers less necessarily causes poorer performance which necessarily causes a decline in business resulting in a loss of profit. Under proper management, performance never declines (at least not significantly *in this field - we aren't talking athletics, engineering, music, etc here where there are massive disparities in the talent pool). Paying dealers less and less should only result in an eventual void in your labor force at some point.

In any case, the correlation between tips and quality of service is weak; such is explained in further detail in the last article I linked.

In instances where hourly wages legally cannot be lowered - specifically, when artificial wage floors are legally implemented (viz minimum wage) - mgmt obv can't legally lower their employees' (dealers') wages; which is plausibly why they aren't lowered in many instances. Also, when employers are forced to pay employees more than what the market says is fair, an inflated wage results. The inflated wages cause inflated prices, and inflated prices cause inflation to permeate through the rest of the economy (which, btw, is why those - mainly liberals, but conservatives, too - who advocate regulated markets - ie minimum wage laws, etc - are dumb. They act on feelings, not logical thought.).

In order to evaluate the effects of non-tipping players you have to move the variables. What happens if tipping increases 10%, 100%, drops 10%, drops 100%? Only when the rake increases as a result can you show that someone was actually free-riding. I think that they only time you will see that happen is if tipping were to drop off by a lot - 50% or more. In every other case I think the result will be overshadowed by the oversupply of labor and artificial wage floor. Only in the extreme cases will you even be able to measure and place a value on the cost of free-riding.

It's not particular to me. For instance, here is The Economist discussing a similar definition (along with some alternatives). Anyway, who cares what we call it? The point is the meaning of what I said, not the label I used to say it.

Well, according to Wynner1 above, Wynn Casinos is being sued right now for doing this with their table games. However, I don't really know the law here--I'm just assuming that the casinos can pay their employees however they wish, so I am assuming that all of the major casinos can do this. Am I wrong in making this assumption?

I guess we will have to just disagree on this point. I would be very surprised if higher wages were not correlated with better service.

Here's an example. Let's say that a casino has an opening for a dealer. If it offers to pay $5/hour it will get 100 applications, but if it offers to pay $10/hour it will get 1000 applications. Obviously, if the casino offers to pay $10/hour it will get a better dealer because it is picking from a wider pool of applicants. Unless you think that differences in worker outcomes is solely dependent on management, this effect will continue on.

I doubt that this is true in poker. For me, the most important thing a dealer can do is deal quickly--which is also what will most increase her tips. The relative amount of tips between dealers might not reflect quality of service, but for the dealer herself it should.

Next time, define your terms first.
Don't use an alternative definition where most people would assume the commonplace.


So, you are in the habit of using examples you have no knowledge of. You then misstate the examples.

You make assumptions that fit your argument without bothering to check them out.

Cute.

Thanks for the advice. Now, would you like to address the substantive point involved?

Okay. I think we have different goals in this conversation, so I'm sorry if you dislike my posts.