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The Three Percent Solution
The Reno Hilton recently built on a practice begun at the 2000 Tournament of Champions and subtracted 3% from each
poker tournament prize pool for the dealers and floor staff. While this practice has a minor flaw that I address below,
overall it is a long overdue, truly terrific practice that will keep tens of thousands of dollars a year within the poker
economy -- as soon as other casinos get on board.
Like many others, every year I tip thousands of dollars. I have had to pay federal income tax on that money I won that
I tipped. The dealers and floor staff then also were required to pay income tax -- on those very same dollars that were
in my hand for only about ten seconds -- on the income they received from my tip.
Duuuuuh! Are we in the poker community a bunch of idiots or what? There is absolutely no sense to this. Each year this
process of different people paying income tax on the same money repeats itself over and over. In Reno I was fortunate enough
to come in second place in one event. I made about $25,000. Since the 3% for the employees was already deducted, I received
about $750 less gross, but I did not then have to tip that $750. If like under the old way I did momentarily receive that $750,
then tip it, at the end of the year I would owe about $200 more in taxes (since tipping is not a tax deductible gambling loss).
Again, this scenario similarly played out for all the other Reno winners. Many thousands of dollars will now not needlessly
be sent to Washington, but instead will be left in poker players’ pockets.
At the same time, while normally at another casino I could not deduct my tip from my taxes, because of the 3% method, the
other players who entered are able to deduct the 3% that is tipped, because it is part of the gross cost of entering the
tournament. Only those players who show some gambling income each year are able to actually offset that income with gambling
losses, like the cost of buying into a tournament, so there isn’t a tax benefit to every single player in being able to now deduct
the spread-out cost of tipping, but obviously the many hundreds of players who make some income this year will benefit somewhat.
So, not only does the 3% method prevent the group of winners from being needlessly taxed on money that they actually tipped,
it gives the much larger group of players a larger tax deduction! Again... duuuuuh! This is a wonderful “no-brainer” for poker.
Additionally, the 3% solution addresses a fundamental problem involved with tipping. Some people stiff, some people toke
generously, some do it from peer pressure. There is no logical reason that the compensation for the work done by the employees
should depend on who wins an event. The employees should do a good job, and the customers should expect a good job to be done,
regardless of who wins. More good dealers will deal if they know they will be compensated decently.
The tipping system we have now is a bizarre relic of days gone by. Most of the dealer-based problems in this industry (both
dealer incompetence and abuse from players) stem from tipping as the basic way dealers get paid. If we all pay for the dealers
and staff, we all can expect and demand good quality work from them.
All that said, 3% is too rigid. Tournaments are not all the same. A $1000 tournament with 80 players does not require
the dealers or staff that a $100 tournament with 800 players does. So, I suggest casinos adopt this straightforward system:
-- events $299 and below, 3%;
-- events $300 to $999, 2.5%;
-- events $1000 and above 2%.
Additionally, if an event is a multiple rebuy event, .5% less than the above numbers would be deducted (for example, a
$330 multiple rebuy event would have 2% deducted from the prize pool), and/or if an event is under 50 players .5% would
be deducted (so for the deuce-to-seven rebuy event at World Series with less than 30 players, the percentage would be 1%).
I believe the implementation of this scale, and the basic 3% concept, will be a tremendous boon to tournament poker. Not only
will the group of players save thousands and thousands of dollars in taxes, there will be better dealers knowing they will
get a good wage; there will be more accountability for customers to expect casinos to provide good employees; there will be
more good employees so less headaches for casinos; there will be more good dealers so less headaches for players -- and for
other good dealers who get abuse now because some dealers are incompetent; and even the biggest parasitic stiffs among the
players will benefit from having better quality dealers.
Casinos should implement the 3% solution, and players should ask them to. It’s in everybody’s best interest... except the US
Treasury.
Poker Dealing in the 21st Century
The first thing we need to understand when talking about poker dealing today is that dealers are not
generic -- they differ greatly in training, ability and desire.
Incredibly, most casinos do not train their dealers. This betrays a lack of respect for their employees and their customers.
Casinos must take responsibility to train dealers -– and protect them from abuse. Imagine Chrysler putting a people on the
assembly line without training them. Imagine McDonalds putting a person in front of a stove without training. Yet these
multi-million dollar businesses do just that. The casinos rely on dealer schools, which, to say the least, don't teach dealers
what they need to know to do their job.
The first responsibility of a dealer is to "run the game." Those words don't even seem to be spoken at these
self-accredited schools, which often are nothing more than a rip-off. They do an adequate job of teaching relatively
unimportant skills (how to shuffle, pitch the cards, drop the
rake), but do virtually nothing to prepare a
dealer for the "real world" of a poker game.
Another issue to be faced is the fact many new dealers have limited English skills. With the exception of most higher-stakes
games with all experienced players, the single most important tool a dealer has to do a good job is their voice. This goes back
to running the game. If a higher-stakes game runs smoothly on it's own, a dealer should just "dummy up and deal."
But a game with any glitches (a player who’s had one too many, a novice who never is quite sure whose turn it is, a
bully, an angle shooter) needs a dealer who
will speak up and keep things moving smoothly. Someone who can't clearly understand or speak English simply isn't qualified
to do a job where "English only" remains the rule.
Sadly, the large number of semi-incompetent dealers leads directly to increased abusiveness from players. Dealers get paid
minimum wage and are thrown to the lions. Some crybabies complain because a dealer dealt them a losing hand. This is just
foolishness that dealers need to ignore, and casinos need to police so it doesn't get excessive, but other dealer abuse stems
directly from poor performance -- a result of the cumulative effect of poor work done by some of their fellow employees.
So what can be done? First, players need to bring pressure on the casinos to train their employees. Second, dealers need
to ask for training, and police their comrades. Nobody wants to deal at a table left chaotic by the previous dealer. Third,
most importantly, and by far most controversially: unionization. It's time to bring poker dealers and casino employees into
the 21st Century. A union like the Teamsters or the Service Employees International Union needs to be persuaded to organize
these unorganized laborers.
Unionization will inevitably lead to greater casino accountability which in turn will lead to better training, more stringent
standards, an almost sure reduction in kickbacks and extortion payments... and finally a higher base wage. The higher wage will
certainly be passed along to customers in the form of a higher rake, but that will reduce or eliminate the propriety and need
to tip. These days the responsibility for keeping good dealers working is entirely on the players! Excellent dealers won't deal
if the "stiffs" cause their income to drop to the point it isn't worth it. (Funny how the stiffs tend to be the
biggest whiners about dealer quality.)
The effects, the branches, of unionization lead many directions -- almost all in everybody's long-term interest. The absurd
minimum wage-based triangle of (player) abuse, (company) no-responsibility and (dealer) incompetence simply cannot endure the test
of time. A change is gonna come. For all our sakes, let's work to make it "sooner" rather than "later".
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