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Best of Benjamin Spillman

Gaming Guru

Benjamin Spillman
 

Downtown workers facing tighter pay

23 August 2007

LAS VEGAS, Nevada -- It appears casino owners in the declining downtown Las Vegas market will ask workers to bear some of their financial pain.

Contract negotiations for about 10,000 downtown employees affiliated with Culinary Local 226 are under way, and negotiators for the casino owners say the pay gap is likely to widen between struggling Fremont Street casinos and the booming behemoth resorts on the Strip.

Even the Golden Nugget, considered to be the swankiest of the downtown casinos, will look to set future wages in line with other Fremont Street properties as opposed to paying Strip-level wages.

"It is going to be a struggle," said Gregory Kamer of the law firm Kamer Zucker Abbott, which represents seven downtown casinos in the talks, including the Golden Nugget. "Some of these properties we represent downtown are barely making it."

A union official acknowledged the economic limitations of the downtown properties, where gambling revenue has been stagnant or in decline more than a decade. But she also said workers are still looking to protect wages, favorable work rules and job security, especially in the face of myriad ownership changes at downtown casinos.

"The industry has changed a lot. There has been a lot of buying and selling," Culinary political director Pilar Weiss said. "Right now if your casino is bought and you are under contract, you want to have protection."

The most recent five-year contract expired May 31, but remains in effect during negotiations, which are expected to last until October at the earliest. On Sept. 12 if no contract is in place, union workers will vote to authorize a strike, Weiss said. But they won't actually walk off the job unless negotiations stall.

Since 2002, when the last contract went into effect, the amount of money gamblers lost to casinos on the Strip increased from $4.7 billion to $6.7 billion in 2006. Downtown casinos, in contrast, had their take from gamblers decline from $657 million to $630 million during the same span.

Kamer said the phenomenon is reflected in average daily room rate at hotels in each market, which in turn contributes to an expectation that the wage gap between the Strip and downtown will increase.

"The real concessions are going to have to be in terms of wages," he said.

Whether the workers will accept the casino's bargaining logic remains to be seen, especially at the Golden Nugget.

The casino is the largest downtown property, with more than 1,000 rooms and has an upscale tradition that dates back to the days when luxury operator Steve Wynn owned the property.

The current owner, Houston-based Landry's Restaurants, has poured more than $100 million into renovations at the Golden Nugget. Marketing employees describe the property as a Strip hotel in a downtown setting.

The Golden Nugget, through Kamer, is negotiating separately with the union as opposed to other downtown properties that are bargaining in a group setting.

Kamer said wages at the Golden Nugget should be more in line with other downtown properties, not resorts on the Strip. That's because, according to Kamer, the Golden Nugget isn't getting Strip-level rates for its rooms.

"Even though the Golden Nugget is slightly closer to the Strip (in quality terms), it is closer to downtown with the room rate," Kamer said. "Ultimately it can't get that customer to pay a Strip rate downtown."

Kamer said wages for current Golden Nugget employees won't decrease. But future employees could start at a lower scale.

The union opened negotiations on its end with a proposal similar to one Harrah's Entertainment signed with employees June 16 that includes annual raises of 3.7 percent. The Riviera, an older, value-oriented Strip property with about 1,000 workers, followed suit with a similar deal last week.

Weiss said rewarding front- line employees who carry bags, cook food, clean rooms and serve drinks is critical because they are the people who interact most with customers. The relationships between employees and customers downtown is especially important, she said, because many people have frequented the same Fremont Street casinos for decades.

"They pride themselves on being part of why people come back," she said. "They don't want to lose that business."

Downtown workers also deserve to maintain their share of what the union calls the Las Vegas dream, she said.

"That is part of what we are seeking to protect," Weiss said. "Service workers in the gaming industry can earn a good living, they can own a house ... and they can provide for their families."