Date: 12/14/1999
From: Jim Geary
Newsgroups: rec.gambling.poker
Subject: Re: I have an idea about tipping...
On Tue, 14 Dec 1999, Jonsaces wrote: > Thanx for your response...a dealer does indeed perform a SERVICE with every > hand dealt...the level of your gratuity depends upon the scale of tipping > you have established for yourself...unfortunately wages are not determined > at my level of the management chain...i do believe that if the scale of wage > was raised for the dealers that it would be directly paid by the players > thru an increase in rake which would not benefit the players. > I guess the main reason for my reply to the post is that these people derive > they're living from tokes and if people didnt toke what would be the > incentive to deal the Great Game of Poker !!...John
What basis do you have for your assertions? The following is a repost of a portion of an 8/26 post: Paying the Dealers a "Fair" Wage It has been oft stated that players shouldn't be "forced" to supplement the dealers' incomes by toking; that the casinos should pay their employees a fair-market wage. People then counterargue that this would drive the cost of the rake up to compensate. This simply is not true. It assumes that the rake(cost of poker) is at least partially a function of the costs that go into delivering the product. (Specifically, P*=MC, equilibrium price goes to the marginal cost to produce a product). This is probably true for computer manufacturers. But this is based on an economic model of a competitive capitalism. By and large, this model fails for casino poker. There are not an infinite number of firms vying to sell you poker. In most locales, poker is run by monopolies or oligopolies. The pricing is inflated to reflect this. Tricking you into paying the dealers is just one more implementation of this monopoly pricing power. If the card rooms were magically compelled to pay the dealers a reasonable salary and tipping was prohibited, the effect on the rake would be minimal. The possibility does exist, tho, that card rooms would use this information to try to jack up the rate, but when prices start to abut monopoly levels, it is already a sign that the sellers think they are getting you for as much as they can.
> This all sounds very intellectual and well thought out, but have you ever > thought of this? How many times have you read or heard about some casino > closing its poker room even though business seemed to be going well? They take > out the poker room and add more table games or more than likely more slots. In > all your intellectual brilliance did you ever think about why that is done? > Well since I run a poker room I can tell you why. It is because of profit > margin. Regardless of your fancy equation the simple fact is that if you > raise all the dealers salary to say $15, that is roghly triple the hourly wage > of most dealers. Well, if the rake is the only source of revenue in a poker > room how is that not going to lower the profit margin? Of course it is. Here > is some simple math to show you. If you have 18 full time dealers and you pay > them $15 an hour your wages for the week(for dealers @ 40 hours) would be > $10,800. If you only pay them say $4.75 an hour (my starting wage) your wages > are $3,420. For the month your wages would be $43,200 @ $15 and $13,680 @ > $4.75, that is a difference of $29,520 per month. How many more rooms do you > think would close down if dealer payroll tripled? So if you don't want to tip > then don't but don't encourage others to join your crusade just so you don't > look cheap. Players who don't tip get extremely irritable when questioned > about why they don't tip, yet they always want to push there doctrination on > the people who do tip. This is what Intellectuals I believe would call the > fear of being alone.
(JG's original oligopoly analysis deleted) > This all sounds very intellectual and well thought out, but have > you ever thought of this? How many times have you read or > heard about some casino closing its poker room even though > business seemed to be going well? Hm, intellectual? I'm not sure what that means. Does that mean that a person went to college or maybe at least learned how to apply reasoning to the analysis of problems? I do know the difference between analytical and anecdotal, tho. > They take out the poker room and add more table games > or more than likely more slots. In all your intellectual brilliance > did you ever think about why that is done? Well as a matter of fact I have. I'm afraid it will once again lead us to that nasty notion of economic analysis. Read on. > Well since I run a poker room I can tell you why. What are the requirements for this job anyway? > It is because of profit > margin. Regardless of your fancy equation the simple fact is > that if you raise all the dealers salary to say $15, that is roghly > triple the hourly wage of most dealers. Well, if the rake is the > only source of revenue in a poker room how is that not going to > lower the profit margin? Of course it is. Here is some simple > math to show you. If you have 18 full time dealers and you pay > them $15 an hour your wages for the week(for dealers @ 40 hours) > would be $10,800. If you only pay them say $4.75 an hour (my > starting wage) your wages are $3,420. For the month your wages > would be $43,200 @ $15 and $13,680 @ $4.75, that is a difference > of $29,520 per month. How many more rooms do you think would > close down if dealer payroll tripled? This is very funny. You say let's say we triple a dealer's wages. You then calculate that given so many dealers and so many hours that the labor expense, like ohmigosh, has tripled. Time out for the concept of multiplication: 3 x 1 = 3 3 x a banana = 3 bananas 3 x a fire engine = 3 fire engines See a pattern yet? Here's some more: 3 x a white shirt = 3 white shirts 3 x a rack of chips = 3 racks of chips 3 x a warm body = 3 warm bodies The advanced students now see where we're going: 3 x a dealer = 3 dealers 3 x a one dealer's wages = 3 dealers' wages 3 x all the dealers' wages = triple the labor expense The above is the tripling-the-wages-expense identity originally first hashed out by those egghead intellectuals in the ivory towers of the University of Chicago, I believe. You have my permission to use it in future posts rather than rigorously demonstrate it every time. Just the same, you did make an effort at actual analysis and now that I've stopped laughing, I'll try to address it. If you would've just posted the above paragraph(well and left out that tripling proof), you would've looked daresay I a bit more intelligent if not intellectual. (content on) I believe that the people who make the decisions to replace a cardroom with slots generally don't understand the problem. They see a slot machine that needs an outlet vs. a poker room that needs supervisors and health insurance etc. They think hmm a slot machine makes $s/hr/sq-ft and a poker room makes $p/hr/sq-ft. Since s > p, let's put in slots. The problem is that they fail to understand the concept of marginal revenue. The only time the marginal value of s is greater than the marginal value of p is when every other slot in the joint is taken AND they don't have any other square footage to place the slots. Others have gone into greater detail in these pages on this subject. Do a deja.com search on the phrase "marginal revenue" and rec.gambling.poker to read more. As long as the poker room is breaking even(and $10/hr per table when they're taking in $80-$120 is not going to be the marginal difference in doing so), it is a mistake to take it out for slots if there are slot machines standing idle. Even then, there are tangential benefits to the room that would point to keeping it when the decision is close. And should it come to pass that every slot machine IS in use AND there is no other room, then NO AMOUNT of trimming labor expense will stand in the way of the slots, I'm afraid. Disclaimer: this doesn't apply to cardrooms in competitive economic markets. My original post was addressing the issue w.r.t. monopolies and oligopolies and stated as much. (content off) > So, You just couldn't stop yourself. Sigh. > if you don't want to tip then don't but don't encourage others > to join your crusade just so you don't look cheap. Ah, now we're getting to the hallmark of a well-thought economic position, the ad-hominem attack. Tho it deserves no reply, for your future understanding: 1) nowhere did I say I don't tip 2) nowhere did I invoke others to do so 3) there is no crusade, I don't care what others do 4) if I've made a well-thought decision, I don't care what others think > Players who don't tip get extremely irritable when questioned > about why they don't tip, I'm not irritable, tho I'm not saying I don't tip. And I'm always happy to expound on anything I think, and I thank you for giving me the opportunity. And I thank you for reading my original post. > yet they always want to push there doctrination on > the people who do tip. _Doctrine_ you mean. There is no word _doctrination_. I'll give you a mulligan on _there_, as even high-IQ me has made that mistake. And as for your actual point, muddied as it is by your language skills, I fail to see a shred of anything beyond a random assertion. > This is what Intellectuals I believe would call the fear of being alone. This is a gem. Your grand finale in response to an analysis of oligopolies is a psychoanalysis of the poster that doesn't even follow from the immediately preceding (false) sentence. This is the kind of closer you hear in back of the double wide after case of Mickey's. Sample dialog: JoeBob: "Some say it's Clinton, but I say it's Greenspan." BillyRay: "But that just proves that McCain knows about the MIA's." JoeBob: "How else can they explain Easter Island?" BillyRay: "uurrrrrrrrrrp." JoeBob: "Just proves he's got a fear of being alone." BillyRay: "yup." JoeBob: "yup." If you'd like to reasonably discuss the issue, I'm still amenable. But I advise leaving the personal attacks at home lest I(you) make you look more foolish still. I've highlighted the actual content in this message for just such an unlikely contingency. Regards, JG
Last Modified 2/9/00