Steve Wynn Betters The Odds for Bosses At Las Vegas Casino (Wall St. Journal)
Summary: In a recent lawsuit filed in Nevada, two Wynn Resorts dealers are suing their employer over the division and sharing of tips. The standard practice among Las Vegas casinos is for all dealers to split tips left at the tables. Tips are collected by the casinos (cameras watch the tables to make sure all tips are submitted), and added to the dealers’ pay checks as taxable income. Wynn Resorts pays dealers $6.15/hour, but tips can bring their annual salaries to almost $100,000. But CEO Steve Wynn recently changed the way tips are split and distributed by including supervisors in the pool, boosting their salaries from $50-$60k/year to about $95k. As a result, dealers will probably see their pay drop by 10%-20%. The lawsuit contends that Wynn is violating a Nevada law which places limits on how employers can modify tip-pool distribution arrangements. While competitors Harrah's (HET) and MGM Grand (MGM) have no immediate plans to follow Wynn's lead in this case, Harrah's said that they "will look at what happens there."
Related links: Full article • Stepping Up to the Gaming Table • The Big Macau Gamble, Vegas Style • Valuing the Casino Industry: Are There More Harrah's Out There? • Harrah's Seems Underwhelmed by Buyout Offer • Harrah's Gamble Not Without Risk • Cramer's Take on Harrah's & MGM
Potentially impacted stocks and ETFs: Wynn (WYNN); little impact on other gambling stocks Las Vegas Sands (LVS), Trump Entertainment Resorts (TRMP), Monarch Casino & Resort (MCRI), Pinnacle Entertainment (PNK)
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