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Gaming Guru

Jeff Simpson
 

Jeff Simpson on why Wynn's tip-sharing plan is both the fair and the right thing to do

2 July 2007

LAS VEGAS, Nevada -- I spent an hour last weekend at Wynn Las Vegas talking with Steve Wynn about the ongoing controversy surrounding the property's tip-sharing system.

Wynn hasn't spoken to the news media about his dealers' vote seven weeks ago to have the Transport Workers Union represent them in contract negotiations with Wynn Las Vegas.

Wynn says the three-to-one margin of the vote was an expression of anger toward him, but asserted that the dealers, and the TWU, are mistaken if they think he will reverse his decision to allow front-line supervisors to receive small shares of the tip pool.

"What did they really get by voting for the union? " Wynn asked me, before answering himself.

"They got the right to walk off the job. And that's it."

Thousands of qualified dealers, not to mention the hundreds of extra-board, nonunion dealers Wynn Las Vegas already has, would gladly fill the positions of any dealers who walked off the job, Wynn said.

The new tip system gives most front-line supervisors, now called "service team leaders," 40 percent of a full dealer's share, with craps boxmen getting 20 percent of a dealer's share.

The shares given from the tip pool, plus additional salary boosts provided by Wynn Las Vegas, increased supervisors' salaries from about $60,000 to about $96,000. The dilution of the tip pool to include team leaders cut dealers' shares by about 15 percent.

Wynn expected dealers' total take-home pay to drop by less than that amount, from slightly over $100,000 to about $90,000, as he expected improved service on the casino floor to generate more tips.

The system is working well, Wynn said. Blackjack hold percentage has almost doubled and 35 of the 39 new service team leaders are former dealers, a promotion dealers used to refuse because it meant a big cut in pay.

Since announcing the system, Wynn has always told me that his dealers were the best paid in the city - and the world - but last weekend he said that the numbers vary week to week.

"Some weeks they're the top paid, some weeks they're No. 2 or No. 3," Wynn said. "But this is important. Every dealer is doing better today than they ever did before they came here."

Wynn said that he will have the same tip-sharing system in place when he opens Encore next to Wynn Las Vegas at the end of next year.

I asked Wynn the same question many dealers have asked me: If he wanted to pay supervisors more, why didn't the company pay them from its own funds, and leave the dealers' tip pool alone?

Wynn grew animated as he answered.

First, he said, the company has increased team leader salaries.

But more importantly, he said allowing team leaders to get a cut of the tip pool was a matter of fairness, a move that needed to be made.

Wynn said that dealers fail to appreciate the amount of service provided by team leaders. And he said that the size of the tip pools themselves has grown so large that it was alienating supervisors.

"The team leaders are responsible for a majority of the good will," he said. "Everyone knows the people in the suits have the responsibility to service the players. Those who provide the bulk of the service are entitled to participate in the pool. The tip pool is so big that it caused the team leaders to feel screwed.

"Everything has changed in Nevada. The size of the business, the kind of customer we get, the amount of money we invest and the income of our employees. We're now a culinary capital, a retail capital.

"And the jobs here are among the best, and the most highly sought after in the world, particularly when you consider the skills required to do them. The skills to be a dealer can be mastered in a matter of months."

Wynn acknowledged that pay cuts are unpopular.

"Nobody likes it," he said of the dealers. "I can't blame them. It's not that I'm unsympathetic to how they feel. But the change is necessary.

"It will allow us to have the best team leaders and the best dealers, and will give dealers the incentive to advance, a wonderful opportunity to do better. It is unreasonable for the dealers to pretend that it is not so. They should not begrudge giving up a tiny fraction of the tip pool. Is this system the right one for our customers? I say yes. This is one of those moments that faces business where traditions must change."

Since the controversy started I've had a lot of dealers ask me how I'd like it if the top editor of the Sun took 15 percent of my pay and gave it to my boss.

Of course, I wouldn't like it. But it would be his right to do so, just as it would be my right to leave and work elsewhere if it happened.

This is a tough issue, but management must have the ability to balance the compensation of its employees. I think that is a fundamental principle of business, and a sound one.

Jeff Simpson is business editor of the Sun and executive editor of sister publication In Business Las Vegas.