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BEFORE THE NEVADA STATE LABOR COMMISSIONER
LAS VEGAS, NEVADA
)
IN THE MATTER OF: )
)
MEGHAN SMITH, Claimant )
)
vs. )
)
THE WYNN, Respondent )
)
______________________________________________________________
CLAIMANT’S POST HEARING BRIEF 2 of 2
______________________________________________________________
A Violation of NRS 608.160: Wynn Casino’s Unlawful Inclusion of “Table Games
Supervisors” in the Dealers’ Tip Pool
______________________________________________________________
Cecil M. Hollins, Esq.
87-16 101 Avenue
Ozone Park, New York 11416
Telephone: (718) 813-7088
Attorney for Claimant
Lawrence Jay Litman, Esq.
6130 Elton Avenue
Las Vegas, Nevada 89107
Telephone: (310) 228-7245
Attorney for Claimant
Gregory Kamer, Esq.
3000 West Charleston Blvd. - Suite 3
Las Vegas, Nevada 89102
(702) 259-8640
Attorney for Respondent
2
Note: For the purposes of the following discussion floor supervisors, box supervisors, pit
supervisors, pit managers, pit boss, floormen, boxman and CSTL’s, will all be referred to as
“table games supervisors.”
Index
Foreword – 5
Meghan Smith – 6
The Issues – 7
Wynn Casino is in Violation of the Provisions of NRS 608.160 – 8
The Hearing Before the Nevada Labor Commissioner – 10
The Proper Perspective – 11
A Historical Perspective:
The Great State of Nevada Legalizes Gambling – 14
Nevada Before Gaming Reform: The ―Wild, Wild West‖ - 17
From Gambling to Gaming – 19
Global Acceptance of the Gaming Industry – 21
The Gaming Industry‘s Importance to Nevada‘s Economy – 26
The Concept of ―Integrity of the Game‖ – 28
How Law is Made in Nevada – 30
How New Law is Made in Nevada: Wynn Casino‘s Unlawful Expansion of the Dealer‘s Tip Pool
to Include ―Table Games Supervisors‖ Prompted the Proposal of Nevada Assembly Bill 357 – 32
An In Depth Discussion of the Issues Before the Labor Commissioner: The Minutes of the
Meeting of the Assembly Committee on Judiciary, 74th Session - March 27, 2007 – 33
Nevada‘s Public Policy Regarding Gaming – 62
Nevada Regulates Gaming Through Legislation; The State‘s Interests Are Paramount – 64
History of Gaming Regulation: State Gaming Control Board, Nevada Gaming Commission and
the Nevada Gaming Act – 66
Gaming Regulation in Nevada: An Update – 73
Nevada Casino Regulation: Minimum Internal Controls Standards (MICS) – 81
The Law of the State: The Nevada Revised Statutes – 84
3
Statutory Interpretation in Nevada – 85
The Office of the Nevada Labor Commissioner – 86
Gaming Definitions: The Nevada Legislature Literally Defined the Gaming Industry – 88
A Gaming License is a Privilege, Not a Right – 90
For the Purposes of This Discussion Floor Supervisors, Box Supervisors, Pit Supervisors, Pit
Managers, Pit Boss, Floormen, Boxman and CSTL‘s, Will All Be Referred to As ―Table Games
Supervisors‖ – 91
Casino Table Games Personnel: Generally – 92
A Closer Look at the Employees at Issue in This Action the ―Table Games Supervisors‖ – 94
The Complete List of Nevada Gaming Employees as Defined by the NRS – 97
Employer as Defined by the NRS – 99
Tips, Tokes, Tip Pooling and Being ―In the Line of Service‖ – 100
The Relevant Case Law: Moen, Alford & Cotter – 103
Moen v. Las Vegas Intern. Hotel, Inc. (1975) – 104
Alford v. Harolds Club (1983) – 110
Cotter v. Desert Palace, Inc. (1989) – 114
Reconciling the Case Law: Moen, Alford and Cotter – 120
Recurring Themes That Bind Moen, Alford and Cotter: – 124
(1) ―NRS 608.160, is a statute prohibiting an employer from taking all or part of any tips
or gratuities bestowed on employees‖ and protect the public against possible fraud – 124
(2) ―An employer shall not reap any direct benefit from tip pooling‖ and – 125
(3) Tip pooling must be of employees in ―the same line of service‖ and comply with the
requirement of conformance with commonly known Nevada employment practices – 125
Regulating the Casino Floor – 127
The Role of the ―Table Games Supervisor‖ in Gaming Today – 128
In Nevada Casinos, Ensuring the Integrity of the Game is the Primary Responsibility of the
―Table Game Supervisors‖ – 133
Nevada Gaming Control Board Gaming Audit Procedures Manual:
(1) MICS – 138
(2) Table Games Departmental Organization – 142
Nevada Gaming Control Board MICS Compliance Checklist for Table Games – 148
4
On April 28, 2005, Wynn Casino Opened For Business:
Employment Policies, Job Titles and Job Descriptions Were in Keeping
With Nevada Gaming Industry Standards – 173
Wynn Casino Employee Handbook: The Table Games Department Before
―the Change‖ on September 1, 2006 – 174
September 1, 2006: Wynn Casino Unlawfully Expands the Dealer Tip Pool
to Include CSTL‘s and Box Supervisors – 184
Wynn Casino Employee Handbook: The Table Games Department After
―the Change‖ on September 1, 2006 – 186
The Real Reason For Wynn Casino‘s Unlawful Expansion Of The Dealers‘ Tip Pool:
―Money‖ – 199
Wynn Casino President Admits to Violating Nevada Law:
Seeking a ―Direct Benefit‖ is an Unlawful Purpose For Tip Pool Expansion – 202
Memorandum From Wynn Casino President, August 21, 2006 – 204
Wynn Casino: ―CSTL‘s Are Not Supervisors, They Are a Combination of Floor Supervisors and
Pit Managers‖ With Additional Customer Service Responsibilities – 205
FACT: No Court in History Has Ever Authorized an Expansion of a ―Dealer‘s Tip Pool‖ to
Include Anyone Other Than Dealers – 209
Nevada Law Prohibits All ―Table Games Supervisors‖ From Accepting Tips; or Inclusion in the
Dealers Tip Pool – 213
The Nevada Legislature Enacted NRS 608.011, Which When Read in Conjunction With NRS
608.160, Expressly Prohibits ―Table Game Supervisors,‖ as Statutory Employers, From Taking or
Sharing in Dealer Tips – 215
Wynn Casino‘s Direct Benefit From Implementation of the Tip Pooling Scheme, Violates Nevada
Law and Policy and is Prohibited by Nevada Case Law – 217
The Repercussions of Wynn Casino‘s Unlawful Expansion of the Dealer Tip Pool; The
Beginning of the Demise of the Nevada Gaming Industry as We Know It – 219
If a CSTL is Not a ―Table Games Supervisor‖ Pursuant to NRS 463.0129, Then This Would Be
An Unauthorized Radical Departure From Nevada‘s Record of Strict Conservatism; Only the
Nevada Legislature Can Make New Law – 221
What Should a Casino Licensee Have Done in a Case Like This? Take it to the Gaming Policy
Committee – 222
Conclusion – 223
5
Foreword
In Wynn Casino‘s fight to re-write Nevada law, Steve Wynn would have the
Nevada Labor Commissioner accept the ―out of this world‖ notion that "The needs of the
one -- outweigh the needs of the many." Kirk to Spock, in a scene from Star Trek III: The
Search for Spock.
Perhaps the ―2010 Star Trek Convention‖ should be held at Wynn Casino,
instead of the Las Vegas Hilton.
In truth, at least according to the Nevada legislature, ―The needs of the
many…outweigh the needs of the few…or the one.‖ Spock to Kirk, in a scene from Star
Trek II: The Wrath of Kahn.
At least that has been the policy of the Nevada legislature with respect to
Nevada‘s Gaming Industry for the last fifty years. The record of conservatism by
Nevada‘s regulators is justified because the strength of Nevada‘s gaming system
depends on its reliability and predictability. The integrity of every aspect of Nevada‘s
gaming industry is the result of decades of effort, and regulators will insure that its
integrity is not sacrificed by radical changes to their regulatory framework.
In brief, Wynn Casino claims that it only seeks to expand the dealers tip pool, in
accordance with Nevada law.
If fact, nothing could be further than the truth.
6
Meghan Smith
In the case at bar, the Labor Commissioner has been presented with a true life,
David and Goliath story. Meghan Smith is a card dealer. The ―mighty‖ Wynn Casino, is a
$2.7 billion dollar, luxury resort and casino.
At the start of the evidentiary hearing, in the opening statement on behalf of
Meghan Smith and her supporters, it was stated:
“For the Wynn Casino, today is the day of reckoning. It is the day that the
truth is revealed. It is the day justice will be served. It is the day the mighty Wynn
Casino’s tip pooling scheme will be exposed as a shameless “money grab”
against hard working American men and women.
Today is the day that no creative, wishful statutory interpretation, will
overcome the truth. The facts are undisputed, the law is crystal clear. The words
of the applicable statutes are precise and not open for interpretation.”
In Wynn Casino‘s opening statement, they told the Labor Commissioner, ―When
the law is on your side – Hammer the law!‖
Well said.
The law is on Meghan‘s side.
7
The Issues
(1) May Nevada gaming licensees expand a mandatory dealers‘ tip pool to include ―table
game supervisors‖?
(2) May Nevada gaming licensees expand a mandatory tip pool, to include job titles of
their ―own creation,‖ who are in fact, ―table games supervisors‖?
(3) Can ―integrity of game‖ be assured on table games where the ―table games
supervisors‖ responsible for resolving disputes between gamblers, are allowed to receive
tips from those participating in the game which they supervise?
(4) May gaming licensees combine the two statutorily enacted ―gaming employment
titles‖ of table games floor supervisor and pit supervisor, which are ―the industry
standard‖ and substitute a new employment title (CSTL) of their own creation?
(5) May gaming licensees substitute the statutorily enacted gaming employment titles of
table games floor supervisor and pit supervisor, with a creation of their own, that is not a
table games supervisor, inasmuch as their primary responsibility, as mandated by the
Nevada Gaming Control Board, is to provide assurance of ―integrity of the table games‖?
(6) May Nevada gaming licensees legally prohibit tip pool members from counting their
own tip?
(7) Under Nevada law, does a gaming licensee breach its ―fiduciary duty‖ to its‘
employees, when instead of putting the employees tips in an interest bearing escrow
account for the employees, the casino claims the interest as profit on its‘ balance sheet?
8
Wynn Casino is in Violation of the Provisions of NRS 608.160; and alternatively
NRS 613.120 or 608.100(2)
NRS 608.160 Taking or making deduction on account of tips or gratuities
unlawful; employees may divide tips or gratuities among themselves.
1. It is unlawful for any person to:
(a) Take all or part of any tips or gratuities bestowed upon his employees.
(b) Apply as a credit toward the payment of the statutory minimum hourly wage
established by any law of this State any tips or gratuities bestowed upon his employees.
2. Nothing contained in this section shall be construed to prevent such employees
from entering into an agreement to divide such tips or gratuities among themselves.
[1:17:1939; 1931 NCL § 2826] + [2:17:1939; 1931 NCL § 2827]—(NRS A 1967, 623;
1971, 1263; 1973, 644).
NRS 613.120 Unlawful to demand or receive fee or commission as condition
to giving or continuing employment to workman; penalty.
1. It shall be unlawful for any manager, superintendent, officer, agent, servant,
foreman, shift boss or other employee of any person or corporation, charged or entrusted
with the employment of any workmen or laborers, or with the continuance of workmen or
laborers in employment, to demand or receive, either directly or indirectly, from any
workman or laborer, employed through his agency or worked or continued in
employment under his direction or control, any fee, commission or gratuity of any kind or
nature as the price or condition of the employment of any such workman or laborer, or as
the price or condition of his continuance in such employment.
2. Any such manager, superintendent, officer, agent, servant, foreman, shift boss
or other employee of any person or corporation, charged or entrusted with the
employment of laborers or workmen for his principal, or under whose direction or control
such workmen and laborers are engaged in work and labor for such principal, who shall
demand or receive, either directly or indirectly, any fee, commission or gratuity of any
kind or nature from any workman or laborer employed by him or through his agency or
worked under his direction and control, either as the price and condition of the
9
employment of such workman or laborer or as the price and condition of the continuance
of such workman or laborer in such employment, shall be guilty of a misdemeanor.
[1:51:1915; 1919 RL p. 3392; NCL § 10605]—(NRS A 1967, 632).
NRS 608.100 Unlawful decrease in compensation by employer; unlawful
requirement to rebate compensation; prerequisites to lawfully decreasing
compensation.
1. It is unlawful for any employer to:
(a) Pay a lower wage, salary or compensation to an employee than the amount agreed
upon through a collective bargaining agreement, if any;
(b) Pay a lower wage, salary or compensation to an employee than the amount that
the employer is required to pay to the employee by virtue of any statute or regulation or
by contract between the employer and the employee; or
(c) Pay a lower wage, salary or compensation to an employee than the amount earned
by the employee when the work was performed.
2. It is unlawful for any employer to require an employee to rebate, refund or
return any part of the wage, salary or compensation earned by and paid to the employee.
3. It is unlawful for any employer who has the legal authority to decrease the wage,
salary or compensation of an employee to implement such a decrease unless:
(a) Not less than 7 days before the employee performs any work at the decreased
wage, salary or compensation, the employer provides the employee with written notice of
the decrease; or
(b) The employer complies with the requirements relating to the decrease that are
imposed on the employer pursuant to the provisions of any collective bargaining
agreement or any contract between the employer and the employee. [1:89:1943] +
[2:89:1943] + [3:89:1943]—(NRS A 1967, 622; 2003, 795).
10
The Hearing Before the Nevada Labor Commissioner
As the final arbiter of the facts, it is the responsibility of the Labor Commissioner
to make determinations regarding what testimony is relevant to the proceeding; the
credibility of the witnesses and their testimony.
We direct the Labor Commissioner‘s attention to the testimony regarding the
following issues:
(1) Wynn Casino‘s reasons for the elimination of the toke committee
(2) Testimony as to why the dealers are prohibited from counting their own tips
(3) The unrebutted testimony of Meghan Smith regarding the toke committee
(4) Meghan Smith‘s testimony regarding the toke committee, specifically, Wynn
Casino ordering payments to be made from the ―dealer tips‖ collected each
night, to pay (tip) the cashiers who verified the count
(5) Testimony regarding ―zero‖ toke count errors by the toke committee, prior to
its dissolution on September 1, 2006
(6) Multiple errors in the counting of the tips by Wynn Casino personnel, after
the elimination of the dealers‘ toke committee on September 1, 2006
(7) Testimony regarding Wynn Casino‘s misappropriation of interest paid on
dealers tips
(8) Relevant testimony regarding CSTL‘s
(9) Testimony that Wynn Casino would not have permitted the dealers, to make
an agreement amongst themselves to exclude CSTL‘s and boxmen from their
tip pool, in violation of NRS 608.160(2)
11
The Proper Perspective
When the MGM Grand opened in 1993, it was hailed as being the biggest and the
best casino on the Las Vegas Strip. At the opening, the MGM Grand sported a
spectacular ―Lions‘ Head‖ entrance, which was truly a work of art. Casino patrons had to
walk through the ―lion's mouth‖ to enter.
However, there was one problem – a lack of ―proper perspective.‖
Generally speaking, to the Chinese patrons, it was considered ―bad luck‖ to enter
through the ―mouth of the lion.‖ So they refused to enter through the front doors of the
casino.
A short time later, the ―Lions‘ Head‖ entrance was replaced.
Proper perspective refers to the relationship of aspects of a subject, to each other
and to a whole, which in this case requires a perspective of Nevada gaming history.
Wynn Casino would like to have this matter to be viewed as a simple labor
dispute and nothing more.
Wynn Casino does not want the matter viewed in its proper perspective.
Wynn Casino states that they have simply combined two job titles in their Table
Games Department, floor supervisor and pit supervisor. They claim to have created a new
position, called a CSTL, by combining the previous duties of the floor supervisor and pit
supervisor, and adding customer service responsibilities to the job description. In a
unique twist, according to Wynn Casino, the CSTL‘s are not table games supervisors.
12
As a result, Wynn Casino claims these CSTL‘s are in the line of service with the
dealers. Consequently, Wynn Casino has unilaterally expanded the ―dealers only‖ tip
pool, to include these CSTL‘s and box supervisors as well.
However, according to the Nevada Gaming Control Board and Gaming
Commission, on a casino floor, ensuring the ―integrity of table games‖ is the primary
responsibility of the ―table games supervisors.‖
If Wynn Casino has done away with floor supervisors, and pit supervisors, and
the ―CSTL‘s‖ are not ―table games supervisors,‖ then for purposes of the Nevada Gaming
Control Board and Gaming Commission, who would provide the required assurance of
game integrity on the casino floor? No, make no mistake about it, these CSTL‘s are
―table games supervisors.‖
It is also true, that under Nevada law, when NRS 608.011, is read in conjunction
with NRS 608.160, it serves to prohibit ―table games supervisors‖ from taking or sharing
in dealer tips.
No, this case is anything but a simple labor dispute.
Like many employers before, Wynn Casino is unlawfully seeking to divert tips
given to its‘ employees, under the guise of a ―valid tip pool.‖ Wynn Casino would have
the law interpreted so as to permit an employer to use employee tips as an alternative
source of income, although in fact this is strictly prohibited by Nevada law. Wynn
Casino‘s policies conflict with the language of the statute, relevant case law and
Nevada‘s legislative intent.
Employers have long ―sought means of diverting‖ tips given to their employees
―into their own tills.‖ Courtney Kenny, Jhering on Trinkgeld and Tips, 32 L.Q.Rev. 306,
13
313 (1916). Under Nevada law, however, tips are the property of the employees who
receive them. A federal courts has held that, ―Forced tip sharing does not violate Nevada
law, so long as the employer does not retain any part of the tips for his own use or reap
any direct benefit from the pooling.‖ Cotter v. Desert Palace, Inc., 402 F.Supp. 157
(1989).
But in truth, Nevada case law, is even more restrictive, permitting employers to
―reap only collateral benefits‖ from the implementation or expansion of a valid employee
tip pool. Alford v. Harolds Club, 99 Nev. 670, 669 P.2d 721(1983).
If nothing else, this matter must be viewed in its proper perspective.
To accomplish this task, a retrospective look at gaming and gaming regulation
within the State of Nevada is presented, including a historical perspective from gambling
to gaming, to global acceptance of the gaming industry. Also offered is an analysis of the
importance of gaming to Nevada‘s economy, the Legislatures‘ motives, Nevada‘s public
policy regarding gaming and theories of conservative regulatory practices.
But the analysis would not be complete without examining Nevada law, how it is
made, including a Nevada Legislative discussion of the identical issues presented herein;
the Nevada Revised Statutes, and the Office of the Nevada Labor Commissioner. We
delve into gaming definitions and how the Nevada Legislature literally defined the entire
gaming industry, including all gaming and table games personnel, employers and
licensees.
Finally, the relevant Nevada case law is presented herein, and the cases are
reconciled to provide analysis of the proper application of the recurring themes that
follow.
14
A Historical Perspective: The Great State of Nevada Legalizes Gambling
Located in the Great Basin desert, few settlers chose to live in Nevada after the
United States acquired the territory at the end of the Mexican War in 1848. In 1859, the
discovery of the "Comstock Lode" of gold and silver spurred the first substantial number
of settlers into Nevada to exploit the territory's mining opportunities. Five years later,
during the Civil War, Nevada was hastily made the 36th state in order to strengthen the
Union.
In 1903, the Comstock Lode's silver had run dry. Faced with a huge territory but
small population, Nevada exempted most companies from taxes and regulation to boost
business. At the beginning of the Depression, Nevada's mines were in decline, and its
economy was in shambles. Nevada's state legislature undertook to respond to ―population
flight‖ by taking drastic action.
Gambling was not legal in the Nevada Territory after 1861 until the legislature
overrode a gubernatorial veto in 1869 to permit it. In 1909 the state legislature once more
prohibited all forms of gambling. This law was amended in 1915 to permit slot machines
and social games for stakes of $2 or less, but gambling as a business was pretty much
outlawed until 1931.
On March 19, 1931, the State of Nevada legalized casino gambling, ushering in a
new world of entertainment that had never before existed. Nevada legalized casino
gambling for two reasons: The state wanted to replace the reliable tax base lost when the
silver business went south, and legislators wanted to benefit from the anticipated tourism
boom. While the motivation of the legislators was questioned at the time, years later,
their action has turned out to be "brilliant."
15
The first gaming license was issued to Mayme Stocker, a dour-looking woman
who opened the Northern Club on Fremont Street in what is today downtown Las Vegas.
Established in 1905, Las Vegas, Nevada, has since become the gambling and
entertainment capital of the world, famous for its casinos, nightclubs, and sporting events.
In the first few decades after the legalization of gambling, organized crime flourished in
Las Vegas. Today, state gambling taxes account for the lion's share of Nevada's overall
tax revenues. Legalized gambling made Las Vegas the gambling capital of the United
States, a status the city has retained.
There was a time, not so long ago, when Nevada was the only state that permitted
games of chance. Today, all but one state has some form of legalized gaming. When the
Nevada State Legislature created the Nevada Gaming Control Board in 1955, they had to
invent a new model for regulation, as no prototype previously existed. The current
regulatory structure is a comprehensive approach to licensing (and taxing) gaming, on
which many other states have patterned their gaming regulations.
The canvas on which the Nevada gaming industry operates was not always clean.
Beginning in 1955, the Nevada legislature took significant actions to transform the nature
of gaming in the consciousness of America. Over the years, many laws and regulations
have changed the gaming landscape. State legislators, gaming attorneys and members of
administrative agencies all made artistic contributions, and by the 1990s, their cumulative
efforts had successfully eliminated old stereotypes and established the framework for
gaming to flourish as a respectable industry.
Many provisions of the Nevada Gaming Control Act were adopted in response to
Senator Estes Kefauver of Tennessee and his Special Committee to Investigate Organized
16
Crime. Nevada was the primary target of the committee‘s investigation in the 1950s, and
Governor Grant Sawyer was one of those who realized Nevada would be judged by
whether it effectively controlled casino gambling.
Historical judicial views also reflected gambling as an evil or nuisance that did
not merit the protections enjoyed by acceptable endeavors. The Nevada Supreme Court
referred to gaming as ‗a source of evil‘ and to casinos as nuisances that encouraged
idleness and disorderly conduct. Further, the justices found that ‗the evil consequent on
[certain types] of gambling greatly overbalanced . . . any good likely to result from it.‘
Even the United States Supreme Court once observed that ‗large-scale gambling
enterprises were seen to be both a substantive evil and a source of funds for other
criminal conduct.‘
After the Kefauver hearings, Nevada‘s legislators and casino owners realized that
gambling needed regulation to be a self sufficient industry.
Skimming practices, reinforcement of stereotypes, and bad publicity would have
flourished without regulation, and the prospect of federal taxation was very real.
Gambling was a vice in the collective consciousness of Americans, and regulation
was vital to placing this vice within the framework of legitimacy.
17
Nevada Before Gaming Reform: The “Wild, Wild West”
In the middle of the nineteenth century, poker became very popular in saloons and
gambling halls. Both the games that were played and the environment that they were
played in, were very different than what you would find in a poker room today.
In today‘s game cheating is relatively rare, and there is a framework of rules and
regulations designed to protect the integrity of the game. In the middle of the 1800‘s this
was not the case. Cheating was commonplace and many different schemes were
developed to defraud the other players. Both management and players were less able to
defend against cheating, in all of its forms, than they are today.
Many of these cheating schemes involved manipulating the deck, either during the
shuffle, or during the deal itself. Many cheaters became masters of manipulating the deck
using slight of hand techniques which could take years to master and would be nearly
impossible to detect with the naked eye. People who possessed these skills were called
―card sharps.‖ Today they are commonly referred to as ―mechanics,‖ and they use a
technique called the ―mechanic‘s grip‖ to manipulate the deal.
An even greater danger to the integrity of the game, was the prevalent use of
marked decks. Decks were not uniformly designed or coated with protective plastic. It
was easy for players to crimp the cards or mark them with small, unnoticeable scratches.
Some players even wore specialized rings or jewelry specifically for this purpose. Many
decks even had the marking hidden in the printing on the back side, for players who knew
where to look.
Given the danger that cheaters posed during this time period, players tended to be
very concerned about the way their opponents conducted themselves during the game.
18
Players were especially concerned about the way the deck was handled both prior
to and during play.
In the middle of the nineteenth century, poker dealers were pretty much non-
existent. Players typically dealt their own cards. The opportunity for a player to cheat was
greatest when that player held the deck in their hand. To protect against dealer
manipulation of the deck, the deal was rotated so that each player had an equal
opportunity to deal.
A knife was traditionally used to indicate which player had the right to deal,
perhaps to remind people of the consequences of cheating. When the deal transferred to a
new player, so did the knife. The handle of this knife was typically made from the antler
of a deer or buck, and therefore was nicknamed the ―buck.‖
As time passed and the culture changed, it no longer was deemed appropriate to
use a weapon to demarcate game play. The knife evolved into a disc called the dealer
button, but it retained the nickname ―the buck‖ for awhile. As the game became more
regimented and regulated, it became less and less common for players to ―deal their
own.‖
With the introduction of poker dealers on a wide scale, the ―buck‖ lost much of its
significance. Its primary purpose, to indicate which player is dealing, no longer applied.
In today‘s game, the dealer does all of the dealing and game integrity is monitored
by the casino, through its floor supervisors and pit supervisors; and to a much greater
extent, as we will discover later, through the efforts of the Nevada State Legislature.
19
From Gambling to Gaming
It became clear over gaming‘s first 25 years that the state needed to establish a
regulation system to keep the games clean. In 1955, Senate Bill 170 was enacted, creating
the Nevada Gaming Control Act and establishing the Nevada Gaming Control Board
(NGB). The Act‘s name is striking; the Nevada Gaming Control Act, not the Nevada
Gambling Control Act. Using the word ‗gaming‘ presented an opportunity to re-define
the industry, and when the Nevada legislature adopted the ‗Nevada Gaming Control Act,‘
it proceeded with a clean slate to achieve the goals of regulation.
Senate Bill 170 deemed gaming licenses to be ‗revocable privileges‘, and gave the
Board‘s agents broad authority to determine who was suitable to hold a gaming license.
The burdens placed on applicants demonstrated the new selective nature of Nevada
towards its licensees; only those of worthy character were welcome. This policy
transformation is a tribute to Nevada‘s lawmakers and regulators, and their ―commitment
to integrity in every aspect of the gaming industry.‖
In 1959, under the direction of Grant Sawyer, the enactment of Assembly Bill 144
created the Nevada Gaming Commission (NGC). Like Senate Bill 170 four years earlier,
Assembly Bill 144 also contained language demonstrating concern with preserving the
moral fiber of the community. The bill charged the NGC with administering its functions
for ‗the protection of the public and in the public interest.‘ Further, the NGC was granted
the authority to issue an emergency order to suspend a license if it was ‗necessary for the
immediate preservation of the public peace, health, safety, morals, good order or general
welfare‘ of Nevada.
20
By demonstrating concern for the general welfare of Nevada‘s citizens, the bill‘s
drafters began to reconcile morals with gambling. The Gaming Control Act passed by
Sawyer in 1959 gave the board and the Gaming Commission great discretion. Both the
courts and public opinion supported this approach. Further tweaks to the system allowed
gaming to operate successfully as long as the integrity of the operation and the games
was assured.
The gaming landscape was further altered in the 1960s. Senate Bill 299, enacted
in 1965, required gaming employees to hold work permits. Valid work permits could
only be issued by the city, county or Board and the bill targeted mob associates who
seemingly held innocent jobs but acted as mob middlemen in skimming practices. In
1967, Senate Bill 349 required all non-restricted licensees to conduct annual audits, and
those audits had to be performed by independent auditors. Erasing the stigma of gambling
that existed in the 1950s required Nevada‘s legislature to exceed expectations; their laws
had to be proactive in addition to being reactive and truly tested their ―commitment to
developing integrity in every aspect of the gaming industry.‖
In 1969, after years of statutory revision, the Nevada legislature continued to
implement gaming reform, by enacting Senate Bill 353 to allow publicly traded
companies to hold gaming licenses. Following the bill‘s enactment, established
companies such as the Hilton and MGM entered Nevada. These corporations were the
right kind, the kind discussed in appropriate business magazines, and within ten years, the
Nevada gaming industry was seen as a safe investment.
By 1978, Holiday Inn had made it respectable for ‗average‘ shareholders to invest
in the gaming industry.
21
Global Acceptance of the Gaming Industry
As the gaming industry emerged from the shadows, gambling became less
despicable. When average shareholders began investing in casinos, Las Vegas became a
glamorous destination for middle-America.
Eventually, Nevada casinos transformed from mere vacation destination, to
investment opportunity, and finally to welcomed neighbor. Nevada has evolved from the
nation‘s moral scapegoat to a model for other communities, as casinos have spread
throughout the nation, all due to the Nevada legislature‘s continuing commitment to
integrity in every aspect of the gaming industry.
The old stigmas associated with gambling have been effectively erased by the
laws noted above and many others. However, to prevent a reemergence, some provisions
of the Act, and associated regulations promulgated by the NGC, operate on the premise
that those stigmas still exist.
The men and women who run the current gaming industry now represent the best
executives in the nation in terms of education, talent, experience, and commitment to
their communities. The two largest gaming companies in Nevada, MGM Mirage and
Harrah‘s Entertainment, demonstrate how gaming companies excel in the areas by which
industry leaders are measured. Both companies have won awards recognizing their
business achievements, leadership in diversity and employee benefits, support of
education and charity, and beneficial involvement in their communities.
On January 27, 2006, the MGM Mirage was cited as one of the top corporations
in the U.S. for multicultural businesses and will be awarded for their commitment to
diversity during the 6th
Annual Multicultural Business Conference at MGM Grand Hotel
22
and Casino in Las Vegas. Fortune Magazine named the MGM as one of the "50 Best
Companies for Minorities" in 2004, and the MGM was recognized by Black Enterprise
Magazine as one of the "Top 30" companies in the U.S. for embracing diversity. The
Mirage‘s gaming executives have also been honored with awards recognizing the
contributions of minorities in business, law, public service and entertainment.
Nevada casinos are also leaders in charitable giving. In 2004, Harrah‘s donated $3
million to the Alzheimer‘s Association, and in 2002 and 2005, Harrah‘s donated $1
million to the Meal on Wheels Association of America. Harrah‘s annually contributes
approximately $1 million to United Way agencies. In all, the company‘s donations
totaled more $30.5 million dollars last year. Off the strip, Station Casinos raised over
$400,000 in response to Hurricane Katrina for the Las Vegas branch of the Salvation
Army.
These are but a few of many examples that demonstrate the quality of Nevada‘s
outstanding leaders and their gaming operations. They are but a glimpse into the reality
that Las Vegas is no longer run by thugs and mobsters, but rather by some of the nation‘s
most qualified and ethical businesspeople.
This transformation is a tribute to Nevada‘s lawmakers and regulators, and their
continuing commitment to integrity in every aspect of the gaming industry. Gaming
companies adhere to standards of compliance that are stricter than those of any other
sector of business, as reflected from the following excerpt of a published article written
by Dean Richard Morgan of the William S. Boyd School of Law and Professor Bob
Faiss.
23
‗Gaming companies and gaming attorneys have routinely observed the highest
levels of integrity in conducting their business affairs. As a result, the dishonored roll of
public corporations whose conduct has scarred the reputation of corporate America does
not contain the name of a single gaming corporation.‘
Through the efforts of prior boards and commission members, with respect to
organized crime, Nevada has effectively put an end to that presence. Organized crime is
present in a lot of different industries, but certainly because of the way the industry is
regulated today in Nevada, it‘s certainly not at the level it once was.‘
Concerns about character can no longer be justified by reference to concerns of
the public, because the image of gaming has changed in the consciousness of America.
Common citizens are not even aware of these burdens, and imposing them does not
further any public confidence in the gaming industry. Rather, the record of conservatism
by Nevada‘s regulators is justified because the strength of Nevada‘s gaming system
depends on its reliability and predictability.
The integrity of Nevada‘s gaming industry is the result of decades of effort, and
regulators will insure that its integrity is not sacrificed by radical changes to the
regulatory framework. While gaming licensees may consider many regulations to be
intrusive, Nevada‘s history has shown it is better to exclude criminal elements from the
industry rather than trying to remove them once they are inside. Still, some licensing
requirements are unnecessarily burdensome, and it is appropriate to consider some
modifications.
In State v. Rosenthal, 93 Nev. 36, 45, 559 P.2d 830, 836 (1977), the Nevada
Supreme Court found gaming to be a privilege that ‗does not carry with it those rights
24
inherent in useful trades and occupations.‘ In the past, gaming was not considered a
useful trade because of its perception as an inherently harmful business. In 2006,
however, gaming is free of corruptive taint, and the leaders of casinos deserve the same
protections as leaders in other industries, which includes a system of checks and balance
on the decisions of regulatory agencies.
Today, the fairness, effectiveness, and necessity of Nevada‘s gaming regulations
and statutes continue to be evaluated and tested. Today, Nevada‘s gaming regulations
face Wynn Casino‘s challenge to the principles upon which gaming integrity is based
within the state.
The State of Nevada and the casino industry face difficult challenges in regulating
legalized gaming activity. The challenge for government is to put into place effective
controls to oversee gaming and to maintain the will to regulate the industry for the public
benefit. There is a direct nexus between effective regulation of the gaming industry and
the long-term success of casinos.
Over the years, Nevada has been able to institute effective regulatory controls,
that not only protect the States‘ interests, but which have also provided a strong
foundation for growth in the gaming industry.
The elements of Nevada‘s effective casino regulation include various operational
controls and licensing of those companies and individuals who participate in the gaming
industry. But first, suffice it to say that the goal of licensing is to ensure that only those
companies and individuals who meet the Nevada‘s standards, actually receive a gaming
license; that organized criminal elements are kept out of the ownership and operation of
the casino industry; and vendors that service casinos, and that otherwise unqualified
25
companies and individuals do not receive a casino license. Additionally, from an
operational perspective, the goal of casino regulation is to ensure that all monies are
accounted for, the casinos are not used to launder money, and that the games are operated
fairly.
Nevada has incorporated in their gaming legislation, public policy goals relating
to the regulation and oversight of gaming, including:
(1) strict regulation of the industry, including detailed provisions pertaining to
licensure and ongoing regulation and taxation; and
(2) the granting of a casino license as a privilege that can be revoked by the State,
if circumstances so warrant. In this way, the holder of any type of license is
placed on notice that it must conform its conduct to certain standards;
(3) the creation, by the enabling legislation, the Nevada Gaming Control Board,
an independent agency to oversee gaming activity.
26
The Gaming Industry’s Importance to Nevada’s Economy
On March 19, 1931, the State of Nevada legalized casino gambling, for two
reasons:
(1) The state wanted to replace the reliable tax base lost when the silver
business went south; and
(2) Legislators wanted to benefit from the anticipated tourism boom.
While the motivation of the legislators was questioned at the time, years later,
their action has turned out to be "brilliant."
Without gaming, Nevada would be a wonderful truck stop on the way to
California. Gambling turned Nevada into the little state that could. No longer does the
majority of the national population look at gaming as an evil business and therefore
gaming operators can easily move not only in the tourism industry, but in the local
community. Investors now line up for the opportunity as do gamers who now see
themselves as entertainment seekers.
Gaming has made Nevada a significant player in the global economy. Travel and
tourism is an area in which the United States runs a balance of payments surplus. It is the
engine of growth for urban Nevada.
The gaming industry‘s importance to Nevada‘s economy is evidenced by the fact
that direct state gaming taxes provide 38% of Nevada‘s budget revenues.
Regulators want to ensure that the industry is not tainted by unsuitable practices.
27
The Nevada Gaming Control Board and Gaming Commission must vigilantly
monitor industry practices to eliminate practices that may come to reflect badly on the
industry.
The Board‘s Audit Division periodically audits casinos to ensure proper
accounting methods and compliance with state laws, gaming regulations, and the casino‘s
own internal controls. Devices such as the List of Excluded Persons, popularly known as
the ‗Black Book,‘ exclude criminal or corrupt elements of society, and regulations
provide that any violation of the Nevada Gaming Control Act by a licensee or a
licensee‘s employee shall be grounds for suspension or revocation of their license.
Each state of the Union of these United States, bears the duty and responsibility to
provide for the welfare of its‘ residents, its‘ businesses and to Union, as a whole. The
great State of Nevada takes seriously its‘ obligations and duties to its‘ residents,
businesses and to each of the states of the Union.
Thanks to exceptional legislative foresight, based on a record of conservatism,
Nevada continues to prosper, even in these harsh economic times. The state has
succeeded because of the strength, reliability and predictability of Nevada‘s gaming
industry.
The key is ―integrity in every aspect of Nevada‘s gaming industry,‖ which is the
result of decades of effort. The Nevada State Legislature, through its regulators, works to
insure that this integrity is not sacrificed by radical changes to its regulatory framework.
28
The Concept of “Integrity of the Game”
An ―official‖ is a generic term, which refers to one who has official authority or
sanction. For the purposes of this discussion an official refers to umpires, judges and
referees in all sports, and in all other forms of endeavor outside the arena.
Officials are held to the highest standard of ethical conduct, because of their
obligation to provide for ―integrity of the game.‖ They are the unbiased arbiters of any
disputes that arise. What this means is, that no player, team, side, corporation or other
entity, receives an unfair advantage over another. Officials are charged with the
responsibility of ―impartially‖ resolving disputes in the matter to which they are assigned.
As previously illustrated, the future and well-being of the gaming industry within
Nevada is hinged upon this concept of ―gaming integrity.‖
Ensuring ―integrity of the game,‖ is the responsibility of ―officials,‖ because of
the crucial role they play, in relation to the competitors and the competition; that is, to
make certain the competitions, whether sport or business, are run properly; and to make
sure that competitors are not doing anything they are not supposed to do.
In competition and other forums, it is common for disputes to arise over both the
technical nature of the rules, and how those rules are meant to govern events that have
occurred. There are many situations where there is a dispute between competitors which
cannot be resolved between the parties, or is part of the issue. Baseball is unambiguous,
the integrity of the game is held in such high regard that one cannot imagine cheating. It
happens, of course. For example, a player corks his bat; a pitcher rubs Vaseline on the
ball; or a player uses performance enhancing drugs.
29
With respect to his position on the issues now before him, in the words of the
Nevada Labor Commissioner, Michael Tanchek, his function can be compared to that of
a referee at a boxing match:
―I am neutral in this situation because my function in it is like the function of a
referee in a boxing match. My duty is to ensure that the rules are enforced. (From
The Minutes of the Meeting of the Assembly Committee on Judiciary – 74th
Session - March 27, 2007, reprinted below).‖
The State Legislature in its‘ infinite wisdom with respect to the gaming industry,
adopted this approach and mandated that these principles be strictly enforced to protect
―gaming integrity.‖
At stake in this dispute is the ―integrity of the table games‖ on the Nevada casino
floor.
Again, the future and well-being of the gaming industry within Nevada is hinged
upon this concept of ―gaming integrity.‖
That is the Legislative mantra that has carried the State of Nevada into the new
millennium, ―integrity in every aspect of Nevada‘s gaming industry,‖ because where
there is no assurance of gaming integrity – there is no game.
30
How Law is Made in Nevada
Only the Nevada State Legislature can pass laws governing the state. Law is a
system of rules, enforced through a set of institutions. The Legislature introduces, debates
and approves new state laws, evaluates and revises existing state laws, and repeals laws
that are unnecessary, antiquated, or no longer needed.
The Nevada Legislature most recently addressed the procedure by which law is
enacted, in their publication entitled, ―How a Bill Becomes a Law‖ from ―A Guide to the
Nevada State Legislature,‖ reprinted below.
“How a Bill Becomes a Law” from ―A Guide to the Nevada State Legislature.‖
How a Bill is Passed
Initial Steps by the Author
Idea - Ideas for legislation come from government, elected officials, businesses, organizations, and citizens.
Drafting - Requests for drafting may be made by legislators, legislative
committees, the Governor, state agencies, and local governments. A staff attorney for the Legislature prepares a formal draft of a bill.
Introduction and First Reading - A bill is submitted by a Senate or Assembly
member, numbered and read for the first time, assigned to committee, and
printed. A bill or resolution may be introduced in either the Senate or the
Assembly and cosponsors in the other house may be listed on the front of the
measure.
Action in the House of Origin
Committee - A committee holds a hearing to take testimony and gather
information about the bill. It may recommend that the legislative house pass a bill
as it is written or pass it with amendments. If a committee thinks that a bill
requires further committee consideration, it may recommend that the legislative
house amend the bill and re-refer it to the same committee or to another
committee. Finally, a committee may vote to "Indefinitely Postpone"
consideration of a bill, effectively killing it, or may take no action at all.
Second Reading Before the Full House - A bill given a "Do Pass"
recommendation is read a second time and placed on General File for debate and
vote. A bill that is given an "Amend and Do Pass" recommendation is read a
second time, amended and reprinted before being placed on the General File for action.
31
Floor Debate and Vote by the Full House - Bills are read a third time and
debated. A roll-call vote follows. For passage of bills that require a constitutional
majority, 11 votes are needed in the Senate and 22 in the Assembly. Bills with
tax or fee increases require a two-thirds majority (14 votes in the Senate and 28
in the Assembly). A measure that does not receive at least the required number of
votes is defeated. Any member who casts a vote on the prevailing side may serve
notice of reconsideration to request a second vote. All bills that are passed by the
first legislative house are then forwarded to the second legislative house where the process begins again.
Action in the Second House
First Reading - Bill is read for the first time and referred to committee.
Committee - Procedures and possible actions are identical to those in the first legislative house.
Second Reading Before the Full House - If passed by committee, the bill is read a second time and placed on the daily file (agenda) for debate and vote.
Floor Debate and Vote by the Full House - The procedure is identical to that in
the first house. If the second house to consider a bill passes it without
amendment, it is returned to the first legislative house for enrollment and
transmittal to the Governor. Resolutions that are passed are sent to the Secretary
of State. If the second house amends a measure, it is returned to the house of origin for consideration of the amendments.
Resolution of Differences (if necessary)
Consideration of Amendments - The house of origin decides whether to accept
the second house‘s amendments. If it accepts the amendments, the bill goes to the
Governor. If it accepts the amendments, the bill goes to the Governor. If the
amendments are rejected, the bill is returned to the second house for a decision
whether to withdraw the proposed changes (recede). If the second house does not
recede, the bill is referred to a conference committee that includes members of both houses.
Conference - The conference committee attempts to reconcile the differences and
presents its recommendation in the form of a conference report. If both houses
accept the report, the bill goes to the Governor. The bill dies if the members of
the conference committee fail to agree.
Role of the Governor
Generally, the Governor must act on a bill within 5 days after he receives it if the
Legislature is still in session (Sundays excepted). However, if there are fewer
than 5 days remaining in session, or if the bill is delivered after the session has
ended (adjourned sine die), the Governor has until 10 days after sine die to act.
The Governor may sign the bill into law, allow it to become law without a
signature, or veto it. A vetoed bill returns to the house of origin for a possible
vote on overriding the veto. An override requires a two-thirds majority of both
legislative houses. If the Governor vetoes a bill after session ends, it returns to
the next legislative session. Measures become effective on October 1st following the end of the legislative session, unless otherwise specified in the bill.
32
How New Law is Made in Nevada: Wynn Casino’s Unilateral Expansion of the
Dealer’s Tip Pool to Include “Ta” Prompted the Proposal of Assembly Bill A.B. 357
The following is an illustration of the aforementioned, ―Action in the House of
Origin Committee,‖ where a committee holds a hearing to take testimony and gather
information about a bill.
In the case at bar, Wynn Casino‘s unilateral expansion of the dealer‘s tip pool to
include ―supervisory personnel‖ prompted the proposal of Assembly Bill 357 (hereafter
A.B. 357). In brief, A.B. 357 sought to revise NRS 608.160‘s provisions governing tips
and gratuities received by employees. Nevada Assemblyman Bob Beers, Assembly
District 21, brought A.B. 357 forward after being contacted by several constituents who
worked as dealers at Wynn Casino.
On March 27, 2007, the 74th session of the meeting of the Nevada Assembly
Committee on Judiciary, the committee addressed the identical issues presented herein.
The committee held the hearing to take testimony and gather information about the bill.
The minutes of that 74th
session with respect to tips and gratuities received by
employees are presented in their entirety below.
The Committee discussion provides invaluable insight to and demonstrates the
complex nature of the issues presented in the case now before the Labor Commissioner.
The issues and questions raised by various interested parties are highlighted for purposes
of illustration.
33
An In Depth Discussion of the Issues Before the Labor Commissioner – The Minutes
of the Meeting of the Assembly Committee on Judiciary – 74th
Session - March 27,
2007
The Committee on Judiciary was called to order by Chairman Bernie
Anderson at 7:42 a.m., on Tuesday, March 27, 2007, in Room 3138 of
the Legislative Building, 401 South Carson Street, Carson City,
Nevada. The meeting was videoconferenced to Room 4401 of the Grant
Sawyer State Office Building, 555 East Washington Avenue, Las Vegas,
Nevada. Copies of the minutes, including the Agenda (Exhibit A), the
Attendance Roster (Exhibit B), and other substantive exhibits are
available and on file in the Research Library of the Legislative
Counsel Bureau and on the Nevada Legislature's website at
www.leg.state.nv.us/74th/committees/. In addition, copies of the
audio record may be purchased through the Legislative Counsel
Bureau's Publications Office (email: [email protected];
telephone: 775-684-6835).
COMMITTEE MEMBERS PRESENT: Assemblyman Bernie Anderson, Chairman,
Assemblyman William Horne, Vice Chairman, Assemblywoman Francis
Allen, Assemblyman John C. Carpenter, Assemblyman Ty Cobb,
Assemblyman Marcus Conklin, Assemblywoman Susan Gerhardt,
Assemblyman Ed Goedhart, Assemblyman Garn Mabey, Assemblyman Mark
Manendo, Assemblyman John Oceguera, Assemblyman James Ohrenschall,
and Assemblyman Tick Segerblom. COMMITTEE MEMBERS ABSENT:
Assemblyman Harry Mortenson (Excused).
GUEST LEGISLATORS PRESENT: Assemblywoman Shelia Leslie, Assembly
District No. 27 and Assemblyman Bob Beers, Assembly District No. 21.
STAFF MEMBERS PRESENT: Jennifer M. Chisel, Committee Policy Analyst,
Risa Lang, Committee Counsel, Danielle Mayabb, Committee Secretary,
Matt Mowbray, Committee Assistant.
OTHERS PRESENT:
Victoria M. Van Meter, Court Master, Family Division, Second
Judicial District, Washoe County, William Gardner, Chief Criminal
Deputy Prosecutor, Reno City Attorney's Office, Brenda Dizon,
Executive Director, The Shade Tree/Noah's Animal House, Nancy Hart,
Representative, Nevada Network Against Domestic Violence, Staci
Columbo, Representative, The Shade Tree/Noah's Animal House, Brian
O'Callaghan, Detective, Las Vegas Metropolitan Police Department,
Gabriela Gandarilla, Representative, Safe Nest, Heidi Folle,
Representative, Safe Nest, Ann Price-McCarthy, Representative,
Nevada Trial Lawyers Association, Don Mello, Private Citizen,
Dayton, Nevada, Albert Maurice, Dealer, Mirage Casino, Jesse Guest,
Representative, Tip-Earners of Nevada, Marcus Hansel, Dealer, Wynn
Las Vegas, Meghan Smith, Representative, Minimum Wage Tipped
Employees of Nevada, Edward L. Watson, Vice President, National
Association for the Advancement of Colored People, Thomas Golly,
Representative, Nevada Tip-Earners, Susan Fisher, Representative,
Nevada Hotel & Lodging Association, Samuel McMullen, Representative,
34
Las Vegas Chamber of Commerce and Nevada Restaurant Association, Kim
Sinatra, Wynn Las Vegas, Andrew S. Pascal, President, Wynn Las
Vegas, Kevin Tourek, Senior VP and General Counsel, Wynn Las Vegas,
Michael Tancheck, State Labor Commissioner, State of Nevada, Dan
Silverstein, Vice President, Nevada Attorneys for Criminal Justice;
Attorney, Homicide Unit, Clark County Public Defender's Office,
Jason Frierson, Public Defender, Clark County, Cotter Conway, Deputy
Public Defender, Washoe County, Joseph Turco, Representative,
American Civil Liberties Union of Nevada, Ben Graham,
Representative, Nevada District Attorneys Association, Kristin
Erickson, Representative, Nevada District Attorneys Association,
Tammy Riggs, Deputy District Attorney, Criminal Division, Washoe
County, Josh Martinez, Representative, Las Vegas Metropolitan Police
Department, Nevada Sheriff's and Chief's Association
“Chairman Anderson:
[Meeting called to order. Roll called.]...
Assembly Bill 353: Makes various changes concerning the restoration
of parental rights. (BDR 11-851). I am removing Assembly Bill 353
from today's agenda and I will move it to April 4th. There are some
issues in the bill that need to be addressed and I want to make sure
there is sufficient time for parental rights questions to be
properly addressed.
Chairman Anderson:
Ms. Lang, we may have to work with the wording before we move this
bill. We will move it to the work session after the next. Let us
move our attention to Assembly Bill 357.
Assembly Bill 357: Revises provisions governing tips and gratuities
received by employees. (BDR 53-1166)
Assemblyman Bob Beers, Assembly District No. 21:
I brought A.B. 357 forward because I was contacted several months
ago by several constituents who work as dealers in one of the strip
resort casinos. A change in the established policy had occurred in
their workplaces. Fifteen to twenty-one percent of their tips were
being taken from them and were applied to the salaries of their
various floor managers.
The dealers showed me a bill that was written in the early 1970s
which originally intended to prevent this from happening. The change
in tip policy was clearly a violation of that statute. Judicial
decisions made after the bill was introduced changed the way the
statute read so that it no longer had any meaning. That is why I
decided to put this bill together. This bill amends the statute so
that the definitions are stated more clearly (Exhibit H). This
legislation would make future judicial editing of the law much more
difficult.
35
Don Mello, Private Citizen, Dayton, Nevada:
Before 1971, employers had to post a sign stating that tips and
gratuities would be applied to their employees' minimum wage.
Without this sign, employees could not apply the tips. In 1971, a
bellman working at the Mapes Hotel and Casino in Reno asked to meet
with me. He had kept a log of his tips and wages for weeks. His tips
for each week were more than his wages; therefore, he owed money to
his employer. Many of his fellow employees were in the same
situation. Then I introduced the original tip legislation in 1971.
This legislation is needed considering that the middle-income
bracket is shrinking, wages are declining, and food and gas prices
have had sharp increases. It is difficult to make ends meet without
tips for people who earn minimum wage. Gaming and mega-resorts bring
tourists to Nevada. Without the hard-working men and women serving
them, there is a good chance many of them would not return.
This bill was brought about because judges have ruled that tips did
not have to be applied as the law read. Nevada became a state 143
years ago, but still has a part-time legislature that meets only 4
out of every 24 months. Nevada has a Judicial Branch that waits for
the legislators to go home so that they themselves can start
legislating. As soon as you have gone home, the Executive Branch
starts writing regulations that have the effect of law. It is time
that this Body becomes a serious branch of government. The Nevada
Constitution says that legislators will be paid for 60 days of a
regular session and 20 days of a special session and not while you
serve on an interim committee. The answer to these problems is to
have an annual session. I recognize that this has been tried before
and the press has said that they will support annual sessions. This
Committee should seriously look at the Missouri plan. It is a plan
that will keep money out of judge's races.
Chairman Anderson:
Mr. Beers, I noticed that in your packet you submitted several
letters of support and three of the 100 affidavits that you received
(Exhibit I). I will have all of these entered into the record for
today.
Assemblyman Oceguera:
Mr. Beers, could you explain what this amendment does?
Assemblyman Beers:
This amendment answers a concern that was raised to me by people who
are involved in tip law. There was an established tradition in
tipping; then a change occurred and tips began to go through payroll
for taxation purposes. They were concerned that the original Section
1, subsection (a) would cause problems with the IRS. This amendment
removes that section without weakening the intent of the law, and
solves a federal problem. It was also brought to our attention that
36
there could be retaliation if this law passes. We would add a
section to prohibit the posting of signs stating that you could not
tip in areas where that practice had previously been customary.
Assemblyman Conklin:
How would the practice of business take place? If I owned a casino
or a large facility and I had 1,000 service employees who garner
tips, it is my understanding that any group of employees could enter
into a written, contractual agreement for tips with the business
owner. Potentially just two people could enter into an agreement and
the owner could have up to 500 different tip agreements in their
establishment? Is that what you intended in this bill?
Assemblyman Beers:
That would be an unintended consequence.
Chairman Anderson:
There are a wide variety of different kinds of games and
opportunities for the pooling of tips. For our purposes, what is the
difference between the busboy, the kitchen, and the waitresses? Do
you intend all restaurant staff to be in one tipping group? How do
you determine who is or is not in the tipping pool? Is it going to
be entirely up to employee groups to determine?
Assemblyman Beers:
That was the original intent that the employees determine their own
tipping groups. One of the reasons for this hearing was so that we
could find ways to avoid unintended consequences. The original
intent of this law as well as this bill was to prevent the
confiscation of tips to help businesses to profit from their
employees' tips. If we need to adjust or add definitions to avoid
confusion down the line without affecting that intent, I have no
problem with that.
Assemblywoman Allen:
I am trying to understand the breadth of this bill. When my younger
brother was in high school, he worked at Winner's Corner Carwash.
During his first year he vacuumed with no tips. The person who
washed the car at the end was the person who earned all tips. My
brother worked his way up until he became the person at the end who
received all of the tips. He worked and collected tips for about six
months until management changed their policy. The people at the end
who received tips were then required to share it with everyone. I am
concerned that businesses have disregarded their employees when they
decided that this was the best solution. Is it your intent that we
affect small businesses?
Assemblyman Beers:
37
My intent is not to affect small businesses. In some small
businesses, such as small diners and casinos, the owner is also
manager, pit boss, dealer, and may also maybe even a server. I am
trying to find a way to accommodate different tip issues that may
arise for those types of businesses. It would be different for a
business of over 30 employees. This bill is intended to prevent
management from arbitrarily making tip decisions without the consent
of those who have earned the tips. If the people who collect tips
want to enter into an agreement where they all share equally, that
should be their choice.
Assemblywoman Allen:
In the carwash example that I gave, the employees at the end of the
production line did not want to evenly distribute their tips.
Management made it the policy to make it more equitable. That
carwash likely had a payroll of over 30 employees, which may be
considered a mid-sized business rather than a small business. Either
way, it seems like the tip decision should be given to each private
business individually.
Assemblyman Beers:
Again, that was the owner making the decisions on behalf of the
employees. In your example, the fiscal impact on employees was
probably not as substantial when they were required to share their
tips amongst the other employees. In situations where employees are
earning minimum wage and need to support a family, the business
should not arbitrarily decide to adjust their bottom-line by
deducting a significant portion of employee's tip earnings. A
reasonable person can see that is not a good idea.
Albert Maurice, Dealer, Mirage Casino:
I have been a resident of Las Vegas for 36 years. I have also been a
dealer for the same number of years. I am here to support A.B. 357.
This bill concerns all tip earners throughout the nation. Current
tip policy has a sweeping and devastating effect on tip earners.
Nevada Revised Statutes 608.160 was passed by this body in 1971.
When read objectively, this bill clearly states that employers are
prohibited from taking their employees' tips for the profit of the
employers. The Wynn tip-policy is clearly in violation of NRS
608.160. Unfortunately, the judicial system has distorted the
meaning of this law since its passage. This is not the first time
that the legal system has distorted the law that they were sworn to
protect. Please honor and respect the intent of your predecessors by
passing A.B. 357. By doing so, you will stop a very damaging policy
that is harmful to citizens, the reputation of the main industry of
Nevada, and the entire State of Nevada. This will send a message to
the legal system in their practice of rewriting legislation and
bring you the respect of your successors so that they may honor the
legislation that you pass in your tenure. We have seen enough
corporate greed and the abuse of power in this country's recent
38
history. This is another example. Please do not let this happen in
the great State of Nevada. Please pass A.B. 357.
Chairman Anderson:
Next we will hear from Mr. Guest.
Jesse Guest, Representative, Tip-Earners of Nevada:
I am going to address Ms. Allen's concerns. The young man who was
vacuuming cars was entitled to tips. As a consumer, it is my
prerogative to tip any particular person I choose. I do not need
anyone, including a casino manager, to take it upon himself to
decide who I intend to tip. I understand that sometimes restaurant
busboys, casino supervisors, or people who vacuum my car may seem
inaccessible when I would like to tip them, but I have the
opportunity to tip them if I desire to do so. For example, if I was
gambling in a casino and wanted a specific person to receive my tip,
I could ensure that I presented them with my tip by specifying who
the tip was intended for. I would not want my tip to be confiscated
by the supervisor for him to determine who I intended to tip.
Consumers have the right to decide who their recipients of their
tips are. It is unfair for management to decide who I, as a
consumer, am required to tip. I ask that you support A.B. 357 to
prevent management from arbitrarily assigning tips that were
intended for other individuals. Perhaps employees can be allowed to
receive tips directly.
Chairman Anderson:
In reference to Ms. Allen's carwash example, oftentimes I tip the
person who presents me with my car after it has been cleaned because
that is the person who I see. I do not necessarily tip that person
because they have done a great job cleaning my car. The person at
the end of the carwash happens to be the person who I have contact
with after my car has been washed. The person who vacuums cars
probably has the most difficult job in the car washing process. They
are most deserving of a tip, but they do not typically come into
contact with customers as they are busy vacuuming.
At a carwash or at other similar businesses, are employees unable to
determine how their tips are distributed? If service employees
desired, would they have the option of amalgamating their tips?
Jesse Guest:
Yes, employees have the option of combining their tips. Generally
speaking, people who receive a tip do not want to share it with
their coworkers. I can understand that. I also understand your
point, and I understand Mr. Pascal's desire to implement this
policy. But I do not believe it is necessary. The person who vacuums
is paid to do his job. He is compensated for his work from the money
that I paid for the carwash package. If I tip the person at the end,
it is to ensure that the person vacuuming does his job well as a
39
form of quality control. If I desire to tip the person vacuuming, I
have the option to walk to him and do that.
Assemblywoman Gerhardt:
As consumers, we should decide where our tip goes. If I want to tip
a valet, he is my intended recipient. If there is a tip box
available, I assume that if I contribute to it, it will be
distributed among the employees. If I contribute to a tip box, I am
assured of who will receive my tip. If we are going to have tips
distributed, perhaps tip boxes are an alternative solution to
individual tips. That way if a consumer wants to directly tip a
dealer, he can ignore the tip box and directly tip the dealer.
Chairman Anderson:
Since table games are regulated differently, the size of the tip
might have to do with the size of the wager that is allowed at a
particular table. Getting a $100 chip compared to a table that only
allows $2 bets makes a significant difference when considering a tip
box. The manager controls which tip box employees could garner since
tips also vary by shift. I remember how casino tips are distributed
from my own experience as a casino employee.
Assemblywoman Gerhardt:
It should be driven by the consumer because they are the ones giving
the tip.
Chairman Anderson:
It seems that employees have a different opinion.
Assemblyman Conklin:
I am concerned about this bill because it seems to have several
unintended consequences that need to be addressed. I have not
received tips since my work experience has primarily been in human
resources. Let us consider that hypothetically there were a group of
employees earning the largest amount of tips. Let us also consider
that this group decided to combine and divide their tips amongst
themselves. What would prevent management from dividing such a group
by sending its members to job assignments which result in lower
tipping? The unintended consequences of passing this bill seem to
outweigh its benefits.
Jesse Guest:
I understand and I agree with you to a certain extent. The practice
that has been in place in Las Vegas has been that everyone working
on the gaming floor contributes their tip to be distributed evenly.
If employees would like a tip pool to be consistently established,
maybe we can add an amendment to provide for that. In this proposed
40
amendment, employees who do not wish to participate will be required
to regardless.
I do not know if this is necessarily an issue of individual
employees in the casino wanting to go for their own tips. As we
stated earlier, there is nothing to prevent management from placing
favored employees in high-tipping positions. If an employee does not
wish to cooperate in a tip-pool, what would stop management from
placing that employee in a poor-tipping assignment? If management
wants a 24-hour tip pool in place, there are ways in place for them
to go about making that possible. In practice it would not be
practical for an established group of high tip-earners to separate
themselves from the rest of the employees and leave everyone else
out to dry. That is not what management wants. They would not be
able to stock their casinos with talented, professional individuals
if that were to take place. Perhaps the bill needs to specify this
issue somehow. The issue could be addressed easily.
Assemblyman Horne:
We might be getting a little away from the purpose of this
legislation. Is this supposed to be a discussion on policies
pertaining to whether or not we should allow certain gaming
facilities to mandate that they share employees' tips with their
management as opposed to the other employees? I know there are some
unintended consequences that may arise from this bill. I do not know
if one of those consequences is a separation of those working at
high tipping tables to those of low-tipping tables having their own
separate groups. There is no danger of those employees working at a
coffee shop being required to share their tips with everyone on the
gaming floor. I do not think that is the danger here. The issue that
needs to be addressed in regards to this bill is whether or not we
are going to allow tips to be shared with supervisors or other
management.
Chairman Anderson:
We are concerned with the precedent that was set recently by the
court in revising the original intent of this legislation. We
clearly want it to be understood that they have changed it from what
the original legislative intent was.
Marcus Hansel, Dealer, Wynn Las Vegas:
I come today as a husband, father of three, and a dealer. I am
asking you to protect my fellow dealers and my money. Nevada Revised
Statutes 608.160 protects dealers' money from casino operators. They
are not to benefit from any form of tip pooling of dealer's money. I
was hired by Mr. Wynn and his property for $5.15 per hour. That is
my pay. About one and one half years later, I now earn $6.15 per
hour. My coworkers and I earn our tips. Mr. Wynn did not guarantee
me any tips when I was offered the job.
Chairman Anderson:
41
Please keep your discussion pertinent to the policy only.
Marcus Hansel:
As many of the Assemblymen have stated, we want our earnings to
remain ours alone. When we do 100 percent of our job, we do not want
to be compensated with 80 percent of our earnings.
Chairman Anderson:
Have you read the bill?
Marcus Hansel:
Yes.
Chairman Anderson:
How will this clarify the problem you experienced at your place of
employment? How does the bill resolve the problem you experienced at
work?
Marcus Hansel:
The bill gives dealers back the money that they earned in tips and
to pool together. It protects our money from being redistributed by
casino owners; to collect our money and give it to management.
Assemblyman Horne:
We have heard today about employees of carwashes not being able to
share in the earning of tips, only those at the end getting it. The
restaurant busboys get to share in tips from the servers; on the
gaming floor, the floor supervisors get to share in tips as well.
Under that theory, if I give you a tip when I give you a $100 bill
for you to make change, arguably you could say that the person you
notify for change is helping you to do your job as well. It begs the
question: why should you not share your tips with that person? How
is that different from other places where tips are shared?
Marcus Hansel:
They have a much higher salary than I do. They do not make $6.15 per
hour. They know what they get paid when they work eight hours. I
know that if I stay eight hours I make $6.15 multiplied by eight.
When I deal to six people, the floor supervisor has four, five, and
six games — multiply that exponentially.
Can that floor supervisor spend quality time with each individual
player as a dealer does? As a dealer we have personal contact with
those players. A dice crew has four individuals that do that. Three
dealing, one on break, they come back. The specific group of
employees takes care of that group of players. You will have 16
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players on a dice game. One floor supervisor is potentially watching
two games. That is thirty-two people that one person is serving.
They have to worry about rating the player. That is their job. They
rate the player. They determine how much the player won, how much
they left with, etcetera. They want to know the information that the
corporation wants to know. Their job is to monitor the earnings of
the casino.
Assemblywoman Allen:
I am trying to grasp how much loss to you there is. As an aggregate
amount to you monthly, how much is this loss to you?
Marcus Hansel:
I could send my daughter to college on what I have lost in one year.
I lose 25 to 30 percent of my earnings.
Chairman Anderson:
This depends on the size of the hourly wage relative to the type of
casino where you are employed. At a minimum, a quarter of your
salary comes from gratuities and what you earn based on your
performance with players.
Marcus Hansel:
I entertain players the entire time I am working.
Meghan Smith, Representative, Minimum Wage-Tipped Employees of
Nevada:
Did you get the four-page letter I wrote (Exhibit J)?
Chairman Anderson:
We will make sure that the four-page letter is in the record. It is
not necessary to read it as it is being distributed right now.
Meghan Smith:
I am a dealer at Wynn Las Vegas. I have been in Las Vegas for the
last four years. Is everyone aware of the practices taking place at
Wynn?
Chairman Anderson:
Please restrict the discussion to this particular policy. If there
is an unusual practice taking place at your casino, you may refer to
your establishment using the phrase "at my particular
establishment."
Meghan Smith:
43
In my particular establishment there is something very peculiar that
happened. We refer to the last Monday in August as "Black Monday."
Our casino owner stood in front of us and told us that he was going
to take a portion of our tips and give them to management. This bill
is trying to stop that. I understand exactly what Ms. Allen is
saying about lines of service—from busboys to wait staff. It is
important to attend to the needs of different levels of service
employees. But management is above service employees. The house pays
them five times more than they pay dealers. Their job is to correct
dealers' mistakes and to prevent tip hustling. Something like this
happened in 1999. My letter addresses that particular incident. The
Resort At Summerlin tried to rename the dealers and floor-men with
the title of "hosts." They decided to pay them all a flat rate of
$7.75 per hour with their full share of tips. The Labor
Commissioner's office is in charge of enforcing the labor laws. The
Gaming Control Board cannot monitor what is going on. If everyone is
involved in collecting tips, it saves the company money since they
do not have to pay management as much money. They said no way. I am
trying to figure out why it is okay now, but it was not in 1999. In
my letter I address several points. I address case law, the code of
federal regulations under the Fair Labor Standards Act (FLSA) where
it defines tip pooling. It says tip pooling is okay, but those who
withdraw from the tip pool must also contribute to it. They define
where if people put $30 or more per month into the tip pool, they
should also be allowed to withdraw from it. Managers are
traditionally not tipped. I would like to address that fact that we
work in a customer service industry so everyone has to be nice to
customers. I call the cocktail waitress over to serve the guests at
my table, but I do not expect her to give me 15 percent of her tips.
What we do is ensure that our guests are served well.
Chairman Anderson:
Have you worked at other properties or is this your only place in
this line of work?
Meghan Smith:
Yes, I have worked at other properties.
Chairman Anderson:
Is your current place of employment the only place where these
tipping practices have been implemented or have you encountered
similar problems elsewhere? This tip issue has all been a fairly
recent development. It is the result of a court case challenging the
interpretation of the law.
I am just trying to put this issue into perspective. It is easy to
dwell on one particular property where the issue is clearly visible,
but the policy changes we would like to make need to be consistent
throughout the State. That way the law remains very clear.
Assemblyman Segerblom:
44
This may be more of a statement but in my experience representing
dealers, they have a very difficult job. Few jobs require that a
person directly cater to his customers by providing them with free
drinks, while proceeding to take their money and continuing to try
and keep them happy. In the course of that process a good dealer
must have a great deal of personality. Female dealers in particular
deal with issues of harassment. Card dealers deserve any money that
they are given in tips.
Chairman Anderson:
I do not think anyone disagrees with the idea that people who are
working hard deserve the gratuities they receive.
Edward L. Watson, Vice President, National Association for the
Advancement of Colored People:
I am a taxpayer in Clark County, and I am in favor of this bill. The
decision of this Committee will set precedent throughout the State
of Nevada. The National Association for the Advancement of Colored
People (NAACP) and I are very concerned about this issue. We think
it has long-range potential.
Hypothetically a person could decide to work in construction, and
then become a foreman. Would it be ethical for the foreman to allow
his employees to work overtime, and then take half of their overtime
wages? When you address this bill keep in mind that it goes far
beyond the casinos. My example is pertinent because this bill
extends into small businesses. This bill is important to me
personally because I tend to tip generously. I always ask the
recipient of my tip who my tip money is shared with. If there is
someone who has worked hard for me, I intend to tip that person
generously. If the recipient of my tip is not sharing it with his
coworkers who may have worked equally as hard if not more so, then I
personally approach those workers and tip them each individually.
If a person vacuuming my car does not do a good job, I will not tip
the person at the end of the carwash. When I tip a team they are all
responsible for overseeing each other's work. The person who
receives a tip needs to take care of the other employees who are on
his team if they also earned that tip. I do not want management to
walk in and tell the employees how the tips should be distributed.
When that happens, we are forced to address a larger issue.
Employees are hired at a set wage. When an employee receives a tip,
it is the customer's way of rewarding him for doing his job well.
Management should not drop their employees' standard of living by
removing any portion of his tip.
I belong to the Local 872. The unions are very concerned about this
bill. We strongly support it. I want to emphasize that the labor
community in Las Vegas is very concerned as well as the NAACP. We
want fairness. If a man can pay $5,000,000 for a picture to hang on
45
his wall, he can surely compensate his supervisors enough to earn a
livable income.
Thomas Golly, Representative, Nevada Tip-Earners:
According to the FLSA, employers may not take the tips of dealers.
Tips are the sole property of the dealers. The FLSA does not apply
in Nevada because it applies to a tip-credit. I have read the FLSA
ten times. There is no contradictory language in it at all. In the
absence of any contrary language the language that is there
prevails. I started at first receiving 100 percent of my tip income.
Now I only receive 85 percent.
Chairman Anderson:
Thank you. If anyone else has written statements, you may submit
them to the secretary. Next we will hear from those in opposition.
Susan Fisher, Representative, Nevada Hotel and Lodging Association:
We want to express our opposition to this bill. I would like to
defer my time to Mr. McMullen.
Samuel McMullen, representing, Las Vegas Chamber of Commerce and
Nevada Restaurant Association:
This is a very intense issue as indicated by earlier testimony. For
the Chamber of Commerce and the restaurant association this has been
a very consistent issue for us.
I will speak generally and then address specific parts of the bill.
In general, this bill severely restricts employers and business
managers from conducting themselves efficiently. We have always
tried to consistently promote and maximize business flexibility. In
this particular case, we are addressing a very sensitive subject.
Employees are confronting their employers about how they run their
businesses. Furthermore, it is important to note that any business
having issues with tipping policies is a customer-service oriented
business. These businesses are the primary sources of revenue for
the State of Nevada. They include the hospitality industries,
tourism industries, and gaming industries. Gaming is specifically
addressed in this matter.
This bill speaks volumes to several different business arrangements,
not only the ones that may have initially generated the issue. This
bill and the additional requirements proposed by Assemblyman Beers'
amendment severely restrict the ability of an employer to conduct
his businesses successfully. In a customer service environment the
primary concern of employers is to ensure that people are treated
fairly.
Fairness is one of the fundamental issues being heard today. There
are serious ethical issues involved in the scheduling and organizing
of employees. Managers need to ensure that positions are filled with
46
appropriate employees. The carwash was an excellent example. The
employees at the beginning of the line share in the finished product
of a customer's satisfaction and tip. As a business owner, you want
everyone to equally benefit from their hard work. Tipping has been a
highly litigated issue in past years. It is important to the morale
of many businesses that all employees work as a team and understand
that they all have a part, and then all share in the rewards. It has
been my understanding that the people who are involved in the
customer service chain in a casino environment and have supervisor
responsibilities have shared in tip pooling arrangements. This
happens in many other industries besides casino floors. This bill
would disrupt many existing arrangements. There should be no
unrealistic restrictions on this issue and an employer's ability to
manage his business.
Assemblyman Horne:
You have made it part of your testimony that employers need to have
the ability to manage their business. Is it your position that all
employees should share in the distribution of tips? It seems more
fitting that the appropriate employees should share in the
distribution of tips.
If you say all employees should share, then in a restaurant setting
the executive chef would share in the tips. In a casino setting
tipping distribution could reach as high as the vice president of
hospitality. Is that the policy that we want to set or will we
establish that it only be employees in the direct line of customer
service?
Samuel McMullen:
I meant all employees in the direct line of customer service. We
have to be reasonable about this. I want to emphasize that employers
need the ability to decide which employees are making a difference
in that customer service experience. If there are tips involved,
then we need the ability to make sure those are fairly distributed.
We do not want employees to have lower morale because it affects
whether or not businesses are successful.
In the case of arrangements like those in the gaming industry, we
have gone from very hierarchical arrangements with multiple levels
to a collapse of those hierarchies. Supervisors are as much a part
of the customer's experience as their employees. There are thousands
of different examples of tip-pooling arrangements. Employers need
the flexibility to decide what makes the most sense.
Assemblyman Horne:
Today you are testifying that the employer is the best person to
determine the boundaries of who shares in tips and how that
structure should be determined in their particular business. We are
trying to determine if perhaps that boundary has been crossed by
employers.
47
Samuel McMullen:
Again, I emphasize that our general position is always going to be
that the employer has to have at least great involvement or control
over which employees are eligible to receive tips, which are
required to share, and which are eligible to share and in what way.
Because you will find that regardless of whether we are discussing a
carwash, a restaurant, or a casino, there are places where it is
challenging to motivate employees to work.
Employers handle morale issues in which people believe they have
been unfairly treated. There are a plethora of issues which can
arise on any given day. Morale issues challenge employees'
motivation to work well in their environment. Employers need the
ability to ensure that their business works properly. They need to
figure out how to staff specific areas. They need to ensure that
they do not have inordinate turn-over. Employers need to have the
ability to find the people that they need in order to fill specific
positions. Then they need to make sure they do not have unfair
treatment issues amongst the individuals hired.
Assemblyman Carpenter:
I have a very small business. I am not certain how many servers we
have, although I know the number does not exceed ten. Some of our
servers have been with us since we opened 20 years ago. To a certain
extent, the reason they have remained our employees for so long is
that they control their own tips. My wife is also adamant that our
employees keep their tips because that is how they feed their
families and keep their homes. That is my perspective as a small-
business owner. I prefer not to get involved in their tips. Getting
involved would be an unnecessary hassle. I do not understand the
benefits of what you are promoting.
Samuel McMullen:
I have eaten at Assemblyman Carpenter's establishment. I know
exactly why his employees are tipped in the manner they are.
Employers are not required to practice tip-redistribution among
employees if they do not think it is in the best interest of their
business. If employers decide tip-redistribution is in the best
interest of their business, they should have the flexibility of
having that option available to them. That enables employers to
determine the best possible way for their business to function.
Hypothetically, if you were to open a second dining room in your
establishment and that second room was not always full, you would
most likely need to have servers for that room. Those servers would
probably not earn as many tips as the servers in your primary dining
area. You would probably want the servers for the second dining area
regardless. You would also desire for those servers to remain
motivated in their duties. In such a situation, you might decide
that it would be fair to divide tips among both groups of servers.
48
Because of your opinion, you probably would not choose to divide the
tips. But at least you would have the flexibility whether or not it
was necessary to divide tips. Your goal is to consistently ensure
that you have people serving your patrons.
Employers have to ensure that their employees maintain high morale
when they deal directly with customers. Employers also have to
consider the incentives that keep their employees dedicated to
maintaining customer satisfaction. In most situations the entire
process must be expedited very carefully.
Chairman Anderson:
How large can the tip-pool potentially be for employees who earn a
low wage? Do you recognize that they have potentially become more
dependent on their tips earnings than upon their hourly
compensation? I am certain that the Labor Commissioner will ask the
same questions.
Samuel McMullen:
The answer is yes. I reiterate that employers analyze their business
situation and try to determine the best action to take to get their
employees to provide excellent customer service. Customer service
environments in particular need employees that have a very special
knack for ensuring that customers have a great experience. These
industries are geared towards attaining great employees and then
maintaining a reduced turnover rate. If the establishment happens to
pay minimum wage, it should still be up to the employer's discretion
how to handle tips. Nowadays it is less common to find minimum wage
work environments in these establishments. Even McDonald's employees
tend to earn $10 per hour.
Chairman Anderson:
Does that set a precedent that needs to be addressed in light of the
recent court decision?
Samuel McMullen:
The court held that the law clearly states that employers and
managers cannot take their employees' tips. The court put conditions
on the redistribution of tips among employees. My understanding of
the argument before you today is that you are being confronted with
a form of confiscation of tips by employers. In the specific court
case that we have referred to, it was determined that the employer
was not taking employees' tips. The court finding confirmed what is
already contained in the statute.
Kim Sinatra, Senior Vice President and General Counsel, Wynn Las
Vegas:
I brought my team with me. I have Andrew Pascal, President of Wynn
Las Vegas and Kevin Tourek, General Counsel of Wynn Las Vegas. We
49
are not going to retrace ground that has already been covered today.
As you consider this bill, I want to reinforce the underlying and
substantive issues that arise. Andrew is going to describe for you
what happened in a particular place on a particular day. Hopefully
we will add understanding to some facts that have not been explored
or properly characterized. I will reinforce for the Committee that
what occurred on our property was not confiscatory.
The law, as it exists and as it has been interpreted both by a U.S.
District court and the Supreme Court of the State of Nevada,
provides that employers cannot take their employees' tips. Nor can
employers use employees' tips to credit employees who would
otherwise earn lower than minimum wage. Neither of these situations
have been an issue for us.
Based on the testimony of the very first gentleman who came before
you today, the spirit of the law continues to protect the employees
of the State of Nevada. The other issue we would like to address is
that the far-reaching impact that any change to the existing law
would have cannot be overstated. We work with large numbers of
employees in southern Nevada in large places of employment
throughout this State.
Where it may be easy to find a service provider in some places, it
is often very challenging to find them for a place as complex as
some of the employment locations along the strip. It is a challenge
to find every single employee who contributed to your customer
service experience. In our particular situation, all 9,000 of us
contribute to the customer experience. As employers we want to have
the ability to run our business and include those who probably have
the least leverage within the tip pool.
If A.B. 357 were enacted into law, all bets would be off. Employers
would have no ability to help set policy in tip-pooling
arrangements. Those who have the least to argue about and who have
the least leverage, like Ms. Allen's brother, could be the ones who
suffer the most. They are the people who need tip income the most.
Those are the people who are probably paid the least on a base
level.
Of our 9,000 employees in southern Nevada, 3,200 earn tips. They are
comprised of 95 different job-classifications. Seventy percent of
those job classifications share in some form of tip-pooling
arrangement. As you replicate the different arrangements throughout
customer service businesses in Nevada, you can see that there are
practically an incalculable number of iterations that would be
affected by a change to this.
Assemblyman Horne:
You made a statement that raised a question. You said that you
wanted to include employees with the least amount of leverage in the
tip pool. Based on my understanding of earlier testimony, the
employees who have been included in a policy change are those who
50
are currently salaried, were previously salaried, or earn more money
than front line employees.
Kim Sinatra:
That is one of the first issues we came here to discuss. Indeed, the
job descriptions within our casino have changed. The people who have
been included in the tip pool are hourly workers as well. They were
making substantially less than the dealers who were previously
included in the tip pool. As Andrew will describe in much more
detail, we have revised job descriptions, made people responsible
for customer service, and included them in the tip pool. But they
were and they remain hourly employees who were making less than the
dealers were at the time.
Assemblyman Horne:
So you made revisions. So you have employees who are in hypothetical
groups A and B that are typically in the tip-pool and employees who
are not in categories A and B. Then you reclassified some of those
employees to be in A or B so they could participate in the tip-pool.
From your testimony I infer that you reclassified them for equity of
sorts.
Kim Sinatra:
If you do not mind, I would like you to save your question for after
Andrew goes through his description of exactly what happened. It
will become clearer at that point.
Assemblyman Manendo:
With regards to the tipping situation among dealers, who
specifically shares tips with the dealers? Which employees and what
are their hourly wages?
Chairman Anderson:
That is a good question. Let us allow Ms. Sinatra to try to run her
testimony the way she wanted to run it. She brought her attorney and
everybody with her so that they could explain. We will come back to
the questions.
Andrew Pascal, President, Wynn Las Vegas:
I am here to clarify exactly what we did at Wynn, Las Vegas. For as
long as Mr. and Mrs. Wynn have been a part of this industry and this
community they have been recognized as being incredibly employee
oriented. Mr. and Mrs. Wynn recognize that above all else, our
employees distinguish us. They help shape the experience that our
guests have when they are on our properties.
Chairman Anderson:
51
With all due respect, please do not specify the name of any
establishment.
Andrew Pascal:
We recognized that we had some issues in our casino that we needed
to address. The most important of those issues was getting the
employees who work closest to customers to take responsibility for
the customer's experience. Our dealers have always done a great job
at that. We needed the people in the pits to show more motivation in
working side by side with dealers. We wanted the pit managers take a
more active role in influencing our guests' overall experience. Our
desire to see this materialize forced us to closely evaluate
everything about how we structured and managed our casino operation.
We came up with an entirely new design which eliminated numerous
employee and management positions. We replaced them with key
administrative support.
The employees who were formerly referred to as Pit Supervisors are
called Casino Service Team Leads. They work side by side with our
dealers. They welcome a guest to their game. They ensure that our
guest is effectively rated during the course of their play. They
converse with our guest. They ensure that our guests' cocktail
service is appropriate and frequent. They ensure that our
environment is clean, that the conditions of the tables are
appropriate, and that the temperature remains comfortable. They are
responsible for everything involving our guests' experience during
their play.
Since they play such a significant role in our guests' experience
and since they directly provide customer service, it is appropriate
to include them in the distribution of the tip pool. We assigned
Casino Service Team Leads a partial share as acknowledgement of the
different role they play relative to dealers. They get a 0.4 percent
share rather than a full share. The impact for dealers and team
leads is that dealers went from making an average of just over
$100,000 per year to making just around $90,000 to $93,000 per year.
They took about a 10 percent reduction in their overall
compensation. They did not take the 25 to 30 percent reduction
mentioned earlier.
Service Team Leads had their compensation increased so that they
have gone from initially making $60,000 per year to $95,000 per year
on average. Now we have more equitable sums in which all employees
that participate, serve, and influence our guests' experience can
partake as appreciation for their service. Those are the fundamental
changes that we made. Service Team Leads are not pit managers, or
supervisors. They direct and influence what happens during the game,
such as how servers direct and manage a food runner or bus person
when servicing the tables that they are responsible for.
We are placing a much greater emphasis than our previous model on
the service that our guests receive. That is to clarify the nature
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of the change. You cannot dispute that they absolutely play a part
in creating an experience for our guests. What is being disputed is
whether or not they are entitled to share in those tips. Today the
law clearly states that if employees are in the line of service they
are entitled to tips. To specifically address the legal implications
of what we have done I am going to turn this discussion over to our
general counsel Kevin Tourek.
Kevin Tourek, Senior Vice President and General Counsel, Wynn Las
Vegas:
As Andrew noted we did change our policy at the casino. Prior to
changing the policy we did our homework. During the development of
the program, we researched the law. We made sure that we gave the
notice required under Nevada law prior to implementing the program.
We have been complying with the statutory and case law and the
directions given to us by the courts and the statutes throughout the
administration of the program.
Obviously there were people who were unhappy with the changes we
made. Those individuals consulted the Labor Commissioner. In
September the Labor Commissioner came out to our casino and reviewed
specifically what we were doing with the Team Leads. He issued a
press release in September stating that that what we were doing was
legal.
Afterwards there were a couple of leaders who filed a class-action
lawsuit challenging the policy. In December of 2006 Judge Herndon
ruled from the bench that our actions were legal. He specifically
noted that the Team Leads were indeed in the line of service in
providing customer service. Testimony was given explaining the job
description of the Team Leads with an emphasis on how they were
providing customer service. The testimony was also given to
reinforce that what we are doing is in compliance with the statute.
The policies that we have implemented respect the written statute,
judicial rulings, and the spirit of the law by allowing the
employees who provide customer service to share in the gratuities
from the customers.
Assemblyman Horne:
My original question seems to have been answered. I agree with the
attempt to provide equity among the employees who you believe are in
the line of service to your customers. What you refer to as "team
leads," previously referred to as floor supervisors or pit bosses,
are they no longer supervising? Do they just have additional duties
which include a supervisory role?
Andrew Pascal:
They still provide a level of oversight on games, but a much greater
part of their role is now in serving guests. In restructuring and
redefining their role, it was not just a matter of giving them a new
title and then placing them in the tip pool. We have redefined the
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job. We retrained everybody on how to perform that job. All forms of
supervisors were put through interviews for the new positions. The
interviewees had to qualify by satisfying the new standards in what
we were emphasizing as part of their job. A number of them did not
receive the promotional opportunities into the Team Lead position.
We had a number of dealers who expressed interest in becoming Team
Leads as well. They also had to qualify to be extended the
opportunity of being promoted into the new position. The composition
of the people that are in this position is very different. They
provide some level of oversight, but I emphasize that there is now a
much greater focus on managing the experience of our guests.
Assemblyman Horne
I just heard you say that some of the dealers sought a promotion to
become a Team Lead. But you mentioned in earlier testimony that Team
Leads make less money than the dealers.
Andrew Pascal:
As former supervisors, Team Leads would have made less money.
Currently team leads make slightly more than dealers.
Assemblyman Horne:
It seems as if you have decreased the pay of one group so that you
could give the other group an increase in an attempt to maintain a
set wage. If you were going to include Team Leads in the same group
as dealers, it may have been more equitable to at least keep them at
the same level of their previous pay. That way they would not take a
blow to their income for including the Leads in the tip pool.
Andrew Pascal:
To some extent we have. We did not really understand what the full
impact of the dilution would be. Overall, we felt that service would
improve in our casino, and it did. We thought that having more
customers would provide more tips. The dealers will get back to what
they were previously earning.
Recognizing that the tips were to be diluted, we enacted a bonus
program for dealers. They have the opportunity to make an additional
$6,000 per year based upon satisfying certain criteria. The criteria
are focused on customer service, how they procedurally deal with
their games, and attendance. That greatest emphasis is placed on
customer service.
There has been a lot of talk about how we implemented these changes
to save money, but the bonus program alone could equate to
$3,500,000 in incremental compensation per year. We also increased
the hourly wage rate for our Team Leads. That increase is also well
over $1,000,000 per year in compensation. Since we have instituted
these changes we are millions of dollars over previous compensation.
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That is the investment we are making along with these changes in
achieving a higher level of service.
Assemblyman Manendo
I am trying to understand how many different categories of employees
share the tips with the dealers? There are the dealers, the Team
Lead, who else?
Andrew Pascal:
There is also a box person.
Assemblyman Manendo:
Is he in that tip pool?
Andrew Pascal:
Yes, he is in that tip pool.
Assemblyman Manendo:
How much are the Team Leads paid hourly and what is the hourly wage
of the box people?
Andrew Pascal:
Currently the Team Leads make an hourly wage of $31.25. I do not
know the specific wage of the box person. I will have to provide you
with that information at a later time.
Assemblyman Manendo:
How much is a dealer's hourly wage?
Andrew Pascal:
A dealer's hourly wage is dependent upon their tenure with us. It is
between $6.15 per hour and $7.15 per hour.
Assemblyman Manendo:
They make $6.15 per hour and you are saying that the average dealer
makes $93,000 per year?
Andrew Pascal:
We are saying that on average their potential is to make $93,000 per
year. This year they are making about $300 per shift. That amount
equals about $75,000 per year in gratuities. That would be an
additional $13,000 when including their base hourly wage. They also
have the opportunity to make an additional $6,000 through the bonus
program.
55
Chairman Anderson:
Do Team Leads contribute money to the tip pool?
Andrew Pascal:
Yes, always. If Team Leads received tips they were required to
deposit them into the tip pool. If they were to receive tips today,
they would absolutely go into the tip box.
Chairman Anderson:
Was that the case in the past prior to the change in policy? Has the
tradition always been that they put it into the common pool?
Andrew Pascal:
Yes, that is correct.
Chairman Anderson
Are you certain of that?
Andrew Pascal:
They put it into the pool and they did not share in it.
Chairman Anderson:
Are you certain that they contributed to the pool and they did not
share in it?
Andrew Pascal:
That is correct. Gratuities were directed to the tip pool.
Chairman Anderson:
In response to Vice Chairman Horne's question, you mentioned an
improvement in service at your establishment. How did you measure
any improvement resulting from this policy change? Has housekeep
gone up? Has the tip pool changed?
Andrew Pascal:
We have a number of different measurements of service. We evaluate
the quality of our service throughout our resorts. We consistently
engage customer service feedback. We hire people to come in posing
as customers. They basically play, profile, and evaluate Team Leads
and dealers. This is practiced throughout our resorts. Every point
of service is evaluated. We are consistently provided with written
reports pertaining to the quality of their experience.
56
The reports have improved. There are now new measures that take into
consideration the length of play in games. We can evaluate and track
the average length of playing sessions. They have improved. We can
also look at the overall volume of business with head counts of the
number of people that are actively playing at any given time. We can
then compare our feedback to the same season for the prior year. By
all measures things have improved. Service has improved.
Chairman Anderson:
Have you changed the way in which your survey instrument is
presented? Have you made the survey more readily available than it
was in the past?
Andrew Pascal:
We have always had programs where we have people come in. The
individuals we hire are like anonymous shoppers. They are hired to
come in and pose as customers. They evaluate their experience. The
criteria they use to evaluate the experience have been consistent in
the way it was provided.
Chairman Anderson:
Do you always track the length of time people play?
Andrew Pascal:
We do head counts, length of playing sessions, and ultimately
revenue.
Assemblyman Ohrenschall:
My understanding is that the traditional, historical role of the
floor person is to be impartial to protect the integrity of the
game. If the floor person shares in the tokes would it compromise
that impartiality in any way?
Andrew Pascal:
No. That is no longer the only means of really evaluating what is
happening at the point of the game. Today's surveillance is far more
robust than in the past. We also have a dedicated team of people
that procedurally evaluate what happens on the floor. They do skill
checks on specific players that we might have some concerns about.
Team leads are not the primary means of protecting the integrity of
the games. We have several other people and systems in place to
ensure integrity.
Assemblyman Ohrenschall:
Are dealers allowed to solicit a toke? If so what does the floor man
do if he observes a dealer soliciting a toke?
57
Andrew Pascal:
They are not to solicit a toke. The tokes exist as a guest's
expression of their appreciation of service. If tips were solicited,
the dealer would be addressed and counseled.
Assemblywoman Gerhardt:
I am uncertain about the serious use of the term "equity." During
times when our economy is very robust your policy is great. What if
we were to experience a period of time when perhaps our economy was
not so robust? If supervisors were making around $30 per hour and
dealers were making $6.15 per hour, would supervisors have to share
their salaries with dealers? The question is valid considering that
we are trying to be equitable.
Andrew Pascal:
You have presented me with a hypothetical situation. I do not think
that I would ask supervisors to share their salaries with dealers.
If there was an intolerable hardship for our employees, we might
look to address that through other means.
Assemblywoman Gerhardt:
So was your answer yes?
Andrew Pascal:
No. We would not necessarily have supervisors share their base wages
with dealers. But if we found that the volume of business suffered
so dramatically that it impacted our ability to retain and
compensate our dealers, then we would have to address that. I cannot
speculate today what that mechanism would be.
Assemblywoman Gerhardt:
I think you understand my point regarding the use of the term
"equity."
Assemblyman Carpenter:
What about the total number of employees in the pit area? Is it the
same number as before or has that number been reduced or increased?
Andrew Pascal:
It has increased slightly due to our changing seasons. We institute
change as we enter our peak season. For the most part, our total
number of working employees remains fairly consistent with some
occasional moderate increases.
Assemblyman Goedhart:
58
I assume that most of your floor associates are under some type of
collective bargaining agreement. Is that correct?
Andrew Pascal:
No, they are not.
Chairman Anderson:
Some dealer groups practice collective bargaining agreements. It
depends on which property they are employed.
Assemblyman Goedhart:
Historically how did they decide who shared in which tip pool? I
would like to know if it was always a customary tradition and how it
may have evolved to become so.
Andrew Pascal:
It evolved to address a lot of the issues that were raised in
earlier testimony. We ensure that we are making it equitable; as far
as balancing schedules, making sure that there was no disincentive
for someone to work in an odd location or a lesser location within
the casino, or on a shift where there typically is not as much
business. Again, in the interest of being equitable, we arrived at
these pooling arrangements. They have worked.
Chairman Anderson:
What time does your graveyard shift begin?
Andrew Pascal:
The graveyard shift starts at 4:00 in the morning.
Chairman Anderson:
What time does your swing shift begin?
Andrew Pascal:
Swing shifts start at 8:00 in the evening.
Chairman Anderson:
So the swing shift earns the greatest amount of tips?
Andrew Pascal:
Yes, for the most part. Gratuities are stronger during the swing
shift. They are also stronger during the weekends verses during the
middle of the week.
59
Chairman Anderson:
It is also dependent upon certain days, where you are located, and
which games you are dealing with in the house. Tips are stronger on
certain days than on the swing shift.
Andrew Pascal:
That is correct. We have outer pits where the table minimums may be
$10. We have other pits where the table minimums may be $1,000 or
$5,000.
Chairman Anderson:
The high rollers do not appear until late in the day.
Andrew Pascal:
They tend to show up and then play for longer periods of time.
Michael Tancheck, Labor Commissioner, State of Nevada:
I reiterate that am neutral on this bill. Unfortunately, I have been
handling this matter quite frequently for the past several months. I
cannot choose a side. I am neutral in this situation because my
function in it is like the function of a referee in a boxing match.
My duty is to ensure that the rules are enforced.
There is kind of a disassociation between that and the language in
the statute that discusses the employees agreeing among themselves
to share tips. That has included some legal issues that have arisen.
The Chairman asked the question earlier of whether or not this bill
solves the problem that we are looking at. I was looking at one of
things that this does. It firmly establishes that employees can set
up their tip pools in writing. So that kind of answers that
question.
As we pointed out earlier there are probably some unanticipated
consequences that could result from this bill. If there is an
unanticipated consequence, you can guarantee that I am going to find
it at some point in time. It will end up on my desk. There are a
couple of things that I have looked at, and one was touched on
earlier: that is to reflect the family-owned business, where that
line is a little blurry between who is employer and who is employee.
Another question is what you will do with a new employee who does
not want to participate in the pool if the employer is out of the
loop there. What about employee agreements that are not in writing?
How do you work around those? This is an issue that people are
probably going to be working on a little bit going forward, trying
to answer some of these questions. I am more than happy to work with
anyone that would have my assistance in trying to work out the
mechanics of how you want to go forward with this. That said, I
would be happy to answer any questions.
60
Chairman Anderson:
Unintended consequences are what we all fear, especially with new
legislation. Do you see any issue that has been unaddressed here
that needs to be addressed in this piece of legislation without
recognizing the general sweep of the NRS versus the specific
application of regulation?
Michael Tancheck:
You have a pool, how big is that pool going to be? How far is it
going to extend? When you get down to it, that is the heart of the
issue here. Does this extend to everyone in the organization or just
to those in the line of service? How far do you want these
boundaries to go?
Chairman Anderson:
Are you suggesting that if we are dealing with an organized group
over a certain number that they should have a mandated tip pool?
Michael Tancheck:
I would not go that far. The reason we need some flexibility here is
that there are a lot of different arrangements even within a single
property—from the valets to the food service to the casino floor to
the housekeeping staff. Circumstances may change from group to
group. That is one of the things that makes it so particularly
difficult to deal with.
Look at Harrah's for example. A few years back they had four
different properties—Lake Tahoe, Reno, Las Vegas, and Laughlin.
There were no violations that took place. We found that each
property was tip-pooling and they were all doing it slightly
differently. The idea of a one-size-fits-all solution makes it a
little difficult to get that result.
Chairman Anderson
Do you think that further modification of the bill needs to be taken
up?
Michael Tancheck:
I could enforce the bill as it is written, and I would not require
anything additional to enforce it. If the group would like to move
forward with modifications, I would fully support that and lend my
expertise.
Assemblyman Ohrenschall:
Do the employees or employers pay the social security on the tips?
Michael Tancheck:
61
Without knowing exactly how they do it, having a one-time thing in a
small company, I think it is a shared type of deal. The employer
pays part. The employee pays part. I do not know, though.
Chairman Anderson:
There is that question, and that is why Mr. Beers suggested a
removal from the current language of the bill. The potential
conflict with the IRS relative to the reporting requirements of
larger properties to the IRS is concerned about making sure that
they get their cut first. That is the reason why this whole scenario
became present. That is why Mr. Mello put forth the legislation
initially in 1971. Just prior to that time the IRS was beginning to
make service employees keep their own log. The inconsistency in that
log led to a uniform policy so it could satisfy both employees, and
so they would not lose 100 percent of their weekly checks in trying
to satisfy the IRS part of it. That is the reason why places like
Harold's Club ended up getting involved in this. Initially it was to
try to solve a dealer problem at their institution. Now we see a new
nuance to it that adds a very unusual wrinkle that does not make me
very comfortable. We will close the hearing on A.B. 357.
We will now turn our attention to the third bill of the day,
Assembly Bill 364.”
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Nevada’s Public Policy Regarding Gaming
In 1959, the Nevada Legislature enacted NRS 463.0129, in which the State
officially adopted a public policy for gaming.
While the public policy for gaming in Nevada is only 280 words in length, it
provides the core basis for the Gaming Control Act, the Nevada Gaming Commission‘s
Regulations and all the decisions and actions of the Board and the Commission.
Nevada‘s policy evinces their commitment to integrity in every aspect of the
gaming industry. These decisions and actions give vital support to the integrity of
Nevada‘s primary revenue-generating industry and its status as the worlds‘ premier
gaming, resort and entertainment destination.
NRS 463.0129 Public policy of state concerning gaming;
1. The Legislature hereby finds, and declares to be the public policy of this state,
that: (a) The gaming industry is vitally important to the economy of the State and the
general welfare of the inhabitants.
(b) The continued growth and success of gaming is dependent upon public
confidence and trust that licensed gaming and the manufacture, sale and distribution of
gaming devices and associated equipment are conducted honestly and competitively, that
establishments which hold restricted and nonrestricted licenses where gaming is
conducted and where gambling devices are operated do not unduly impact the quality of
life enjoyed by residents of the surrounding neighborhoods, that the rights of the creditors
of licensees are protected and that gaming is free from criminal and corruptive elements.
(c) Public confidence and trust can only be maintained by strict regulation of all
persons, locations, practices, associations and activities related to the operation of
63
licensed gaming establishments, the manufacture, sale or distribution of gaming devices
and associated equipment and the operation of inter-casino linked systems.
(d) All establishments where gaming is conducted and where gaming devices are
operated, and manufacturers, sellers and distributors of certain gaming devices and
equipment, and operators of inter-casino linked systems must therefore be licensed,
controlled and assisted to protect the public health, safety, morals, good order and general
welfare of the inhabitants of the State, to foster the stability and success of gaming and to
preserve the competitive economy and policies of free competition of the State of
Nevada.
(e) To ensure that gaming is conducted honestly, competitively and free of
criminal and corruptive elements, all gaming establishments in this state must remain
open to the general public and the access of the general public to gaming activities must
not be restricted in any manner except as provided by the Legislature.
64
Nevada Regulates Gaming Within the State Through Legislation; State Interests
Are Paramount
Nevada‘s Gaming Control Board was created in 1955, with the stated purpose to
―eliminate the undesirable element in Nevada gaming and to provide regulations for the
licensing and operation of gaming.‖
The Board is comprised of three members appointed for four year terms, and has
approximately 450 employees in seven divisions.
In 1959 the Nevada Tax Commission was relieved of its regulatory duties over
the gaming industry and the Nevada Gaming Commission was created with licensing
authority. In 1971 legislation expanded the duties of the State Gaming Commission to
include tax collection. As the first modern gaming agency it has grown over the years.
Largely because of the toughened regulatory system respected companies were
attracted to the industry and today the gaming industry in Nevada has become a
multibillion dollar business.
Nevada had a prior history of problems with organized crime and thus the desire
to keep the industry crime free was upper most the minds of the members of Nevada‘s
Legislature, who clearly did not want to create a system were regulators were a captive of
the industry.
The great State of Nevada is charged with the regulation of all private gaming
concerns operating within the state.
Those regulatory practices have been painstakingly crafted by the Legislature,
over the last seventy nine years.
65
As previously stated, the gaming industry is vitally important to the economy of
the State and the general welfare of the inhabitants.
The continued growth and success of gaming is dependent upon public
confidence and trust that licensed gaming…are conducted honestly and
competitively…and that gaming is free from criminal and corruptive elements.
Public confidence and trust can only be maintained by strict regulation of all
persons, locations, practices, associations and activities related to the operation of
licensed gaming establishments.
All establishments where gaming is conducted… must therefore be licensed,
controlled and assisted to protect the public health, safety, morals, good order and general
welfare of the inhabitants of the State, to foster the stability and success of gaming and to
preserve the competitive economy and policies of free competition of the State of
Nevada. NRS 463.0129 (1)(a)(b)(c) and (d).
66
History of Gaming Regulation: State Gaming Control Board, Nevada Gaming
Commission and the Nevada Gaming Act
The Nevada Gaming Control Board and Gaming Commission comprise the two
tiered system charged with regulating the Nevada gaming industry. The conduct and
regulation of gaming in Nevada are governed by Chapters 462, 463, 463B, 464, 465, and
466 of the Nevada Revised Statutes; and are further clarified by the Regulations of the
Nevada Gaming Control Board and Gaming Commission. The Board and Commission
administer the State laws and regulations governing gaming for the protection of the
public and in the public interest in accordance with the policy of the State.
State Gaming Control Board
The Nevada Gaming Control Board, also known as the State Gaming Control
Board, is a Nevada state governmental agency involved in the regulation of gaming
throughout the state, along with the Nevada Gaming Commission. It was founded in 1955
by the Nevada Legislature. The board is composed of three members appointed by the
governor. Board members serve for four years in a full time capacity. NRS 463.030.
The State Gaming Control Board ("Board") is a three-member body appointed by
the Governor, which serves in a full-time capacity. The Board is responsible for
regulating Nevada's gaming industry 24 hours a day on a daily basis. Its purpose is to
protect the stability of the gaming industry through investigations, licensing, and
enforcement of laws and regulations; to ensure the collection of gaming taxes and fees,
which are an essential source of state revenue; and to maintain public confidence in
gaming. The Board implements and enforces the State laws and regulations governing
67
gaming through seven divisions. The Board has offices in Carson City, Elko, Las Vegas,
Laughlin, and Reno.
This entity receives and processes applications for the licensing of gaming
establishments and employees, receives and processes licensing fees and taxes,
disciplines violations, checks the integrity of gaming devices, performs audits, checks on
publicly traded companies that are also licensees, and maintains other divisions to
monitor different aspects of the gaming industry. The Board currently employs nearly
500 persons.
The Nevada Gaming Control Board (hereafter NGB) prosecutes and takes
disciplinary action against offending licensees, pursuant to Nevada Revised Statute (NRS)
463.310(2).
With respect to jurisdiction, the NGB is an administrative agency of the State
of Nevada, duly organized and existing under and by virtue of Chapter 463 of the NRS
and is charged with the administration and enforcement of the gaming laws of this
state as set forth in Title 41 of the NRS (Nevada Gaming Control Act) and the
Regulations of the Nevada Gaming Commission.
Respondent, Wynn Casino, located at 3131 Las Vegas Boulevard South, Las
Vegas, Nevada 89109, is the holder of a nonrestricted gaming license, and, as such,
is charged with the responsibility of complying with all of the provisions of the Nevada
Gaming Control Act and the Regulations of the Nevada Gaming Commission.
The relevant law applicable to the case at bar is as follows. The Nevada
Legislature has declared under NRS 463.0129(1) that:
(a) The gaming industry is vitally important to the economy of the State and
68
the general welfare of the inhabitants.
(b) The continued growth and success of gaming is dependent upon public
confidence and trust that licensed gaming and the manufacture, sale and
distribution of gaming devices and associated equipment are conducted
honestly and competitively, that establishments which hold restricted and
nonrestricted licenses where gaming is conducted and where gambling
devices are operated do not unduly impact the quality of life enjoyed by
residents of the surrounding neighborhoods, that the rights of the creditors of
licensees are protected and that gaming is free from criminal and corruptive
elements.
(c) Public confidence and trust can only be maintained by strict regulation of all
persons, locations, practices, associations and activities related to the
operation of licensed gaming establishments, the manufacture, sale or
distribution of gaming devices and associated equipment and the operation of
inter-casino linked systems.
(d) All establishments where gaming is conducted and where gaming
devices are operated, and manufacturers, sellers and distributors of certain
gaming devices and equipment, and operators of inter-casino linked
systems must therefore be licensed, controlled and assisted to protect
the public health, safety, morals, good order and general welfare of the
inhabitants of the State, to foster the stability and success of gaming and to
preserve the competitive economy and policies of free competition of the
State of Nevada. NRS 463.0129(1)(a)-(d).
69
The NGB is authorized to observe the conduct of licensees in order to ensure that
the gaming operations are not being conducted in an unsuitable manner. See NRS
463,1405(1).
This continuing obligation is repeated in Nevada Gaming Commission Regulation
5.040, which provides as follows:
A gaming license is a revocable privilege, and no holder thereof shall be
deemed to have acquired any vested rights therein or thereunder. The burden of
proving his qualifications to hold any license rests at all times on the licensee. The
board is charged by law with the duty of observing the conduct of licensees to
the end that licenses shall not be held by unqualified or disqualified persons or
unsuitable persons or persons whose operations are conducted in an
unsuitable manner. Nev. Gaming Comm'n Reg. 5.040 (emphasis added).
Nevada Gaming Commission Regulation 5.010(2) provides that the
―[r]esponsibility for the employment and maintenance of suitable methods of operation
rests with the licensee, and willful or persistent use or toleration of methods of operation
deemed unsuitable will constitute grounds for license revocation or other disciplinary
action." Nev. Gaming Comm'n Reg. 5.010(2).
Nevada Gaming Commission Regulation 5.011 states in relevant part as follows:
The board and the commission deem any activity on the part of any licensee, his
agents or employees, that is inimical to the public health, safety, morals, good order and
general welfare of the people of the State of Nevada, or that would reflect or tend to
reflect discredit upon the State of Nevada or the gaming industry, to be an unsuitable
method of operation and shall be grounds for disciplinary action by the board and the
70
commission in accordance with the Nevada Gaming Control Act and the regulations of
the board and the commission. Without limiting the generality of the foregoing, the
following acts or omissions may be determined to be unsuitable methods of operation:
1. Failure to exercise discretion and sound judgment to prevent incidents which
might reflect on the repute of the State of Nevada and act as a detriment to the
development of the industry. Nev. Gaming Comm'n Reg. 5.011(1) (emphasis
added),
Nevada Gaming Commission Regulation 5.030 provides as follows:
Violation of any provision of the Nevada Gaming Control Act or of these
regulations by a licensee, his agent or employee shall be deemed contrary to the
public health, safety, morals, good order and general welfare of the inhabitants of
the State of Nevada and grounds for suspension or revocation of a license.
Acceptance of a state gaming license or renewal thereof by a licensee constitutes
an agreement on the part of the licensee to be bound by all of the regulations of
the commission as the same now are or may hereafter be amended or promulgated.
It is the responsibility of the licensee to keep himself informed of the content
of all such regulations, and ignorance thereof will not excuse violations. Nev.
Gaming Comm'n Reg. 5.030 (emphasis added).
Nevada Revised Statutes 463.310 states in relevant part as follows:
(1) The Board shall make appropriate investigations:
(a) To determine whether there has been any violation of this chapter or chapter 462,
464, 465 or 466 of NRS or any regulations adopted thereunder.
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(b) To determine any facts, conditions, practices or matters which it may deem
necessary or proper to aid in the enforcement of any such law or regulation.
(2) If, after any investigation the Board is satisfied that a license, registration,
finding of suitability, pari-mutuel license or prior approval by the Commission of any
transaction for which the approval was required or permitted under the provisions of this
chapter or chapter 462, 464 or 466 of NRS should be limited, conditioned, suspended or
revoked, it shall initiate a hearing before the Commission by filing a complaint with the
Commission in accordance with NRS 463.312 and transmit therewith a summary of
evidence in its possession bearing on the matter and the transcript of testimony at any
investigative hearing conducted by or on behalf of the Board. NRS 463.310(1)(a) and (b),
and (2).
Nevada Revised Statute 463.1405(3) provides:
(3) The Board has full and absolute power and authority to recommend the denial of
any application, the limitation, conditioning or restriction of any license, registration,
finding of suitability or approval, the suspension or revocation of any license,
registration, finding of suitability or approval or the imposition of a fine upon any
person licensed, registered, found suitable or approved for any cause deemed
reasonable by the Board. NRS 463.1405(3).
Nevada Gaming Commission
The Nevada Gaming Commission has full and absolute power and authority to limit,
condition, restrict, revoke or suspend any license, or fine any person licensed, for any
cause deemed reasonable. See NRS 463.1405(4).
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The Nevada Gaming Commission is a Nevada state governmental agency
involved in the regulation of casinos throughout the state, along with the Nevada Gaming
Control Board. It was founded in 1959 by the Nevada Legislature. NRS 463.022.
The Commission is responsible for administering regulations, granting licenses
and ruling on disciplinary matters brought before it by the Nevada Gaming Control
Board. It has five members appointed by the governor. Commission members serve for
four years in a part time capacity.
The Nevada Gaming Commission is a five-member lay body appointed by the
Governor, which serves in a part-time capacity. The primary responsibilities of the
Commission include acting on the recommendations of the State Gaming Control Board
in licensing matters and ruling in work permit appeal cases. The Commission is the final
authority on licensing matters, having the ability to approve, restrict, limit, condition,
deny, revoke, or suspend any gaming license. Additionally, the Commission is charged
with the responsibility of promulgating regulations to implement and enforce the State
laws governing gaming.
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Gaming Regulation in Nevada: An Update
GAMING REGULATION
IN NEVADA
An Update...
State Gaming Control Board
And Nevada Gaming Commission
July 2006 Introduction
The origin of this publication was a booklet titled “Gaming Nevada Style.”
It was published by the Nevada Gaming Commission and the State Gaming Control Board when Nevada was the only state permitting legalized gaming. In 2006, 48 states now offer some form of legalized gaming. Obviously, the intervening years have seen many changes and an update was necessary.
Since the first publication of Gaming Nevada Style, there have been numerous books written on gaming and gaming regulation in Nevada. The purpose of “Gaming Regulation in Nevada An Update...” is not to repeat these other texts, but rather provide a primer regarding the gaming regulators in the State of Nevada. Mark A. Clayton, Esq., Member, State Gaming Control Board July 2006 Nevada’s Public Policy on Gaming 1 The History 2 The Early History 2 Birth of the Modern Era 2 Modern Era of Gaming in Nevada 4 Turning Point 4 New Concept in Licensing 4 The Creation of the Gaming Agencies 4 Gaming Control Act 5 Gaming Policy Committee 5 The Nevada Gaming Commission 6 The State Gaming Control Board 7 Investigations Division 7 Corporate Securities Division 7 Technology Division 7 Audit Division 8 Tax and License Division 8 Enforcement Division 8 Gaming Regulation in Nevada 9 Administration Division 9
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Licensing and Taxation 10 Licensing Statistics 10 Types of Gaming Licenses 10 Gaming Taxation 11 Conclusion 12 Gaming Regulation in Nevada Nevada’s Public Policy on Gaming
Nevada Revised Statute 463.0129(1) provides a summary of the public policy1 of Nevada regarding gaming. All gaming regulatory decisions must reflect these public policy mandates. Specifically,
(a) The gaming industry is vitally important to the economy of the State
and the general welfare of the inhabitants.
(b) The continued growth and success of gaming is dependent upon public confidence and trust that licensed gaming and the manufacture, sale and distribution of gaming devices and associated equipment are conducted honestly and competitively, that establishments which hold restricted and nonrestricted licenses where gaming is conducted and where gambling devices are operated do not unduly impact the quality of life enjoyed by residents of the surrounding neighborhoods, that the rights of the creditors of licensees are protected and that gaming is free from criminal and corruptive elements.
(c) Public confidence and trust can only be maintained by strict regulation of all persons, locations, practices, associations and activities related to the operation of licensed gaming establishments, the manufacture, sale or distribution of gaming devices and associated equipment and the operation of inter-casino linked systems.
(d) All establishments where gaming is conducted and where gaming devices are operated, and manufacturers, sellers and distributors of certain gaming devices and equipment, and operators of inter-casino linked systems must therefore be licensed, controlled and assisted to protect the public health, safety, morals, good order and general welfare of the inhabitants of the State, to foster the stability and success of gaming and to preserve the competitive economy and policies of free competition of the State of Nevada.
(e) To ensure that gaming is conducted honestly, competitively and free of criminal and corruptive elements, all gaming establishments in this state must remain open to the general public and the access of the general public to gaming activities must not be restricted in any manner except as provided by the Legislature.
The History T H E E A R L Y H I S T O R Y
Gambling is not something peculiar to modern day Nevada, for gaming in this area dates back to at least 300 BC. Archaeological discoveries in Clark County, Nevada show that early day inhabitants of the area practiced gambling more that 2,000 years ago.2
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In 1861, while Nevada was still a territory, the first prohibition on all forms of gaming was made into law. In 1869, the Nevada Legislature legalized gaming in spite of the Governor’s veto. This law approved numerous games and imposed the first license fee.
Between 1869 and 1907, many changes in gambling regulations and
license fees were made, with the main concern being where and when gaming could be conducted. The 1907 Legislature redistributed gaming fee revenues so that all fees, except those from slot machines, were retained by the county, while slot machine fees went into the state coffers.
In 1909, gaming in all forms was again prohibited effective October 1,
1910. Violations of the new law were felonies, and law enforcement officers were authorized to “break down doors” to seize and destroy gaming equipment. On Governor Oddie’s recommendation, the 1915 Legislature somewhat relaxed this prohibition by permitting slot machines and certain social games, provided the play was for drinks, cigars or other prizes whose value did not exceed $2. Also permitted were games in which the deal changed after each hand. The operators of these games were required to have licenses.
During the years this law remained on the books, enforcement became
less and less effective. The number of illegal operations increased, taking business from the legal establishments and consequently causing a decrease in state and local licensee fees. B I R T H O F T H E M O D E R N E R A
Nevada began its modern era of legalized gambling in 1931, when Governor Balzar signed Assemblyman Tobin’s so-called “wide open gambling” bill.
A schedule of license fees for all games and machines was established by this bill, with the counties assuming the responsibility for the licensing and for the collection of fees. Twenty-five percent of this revenue went into the state general fund, and the remainder stayed in the counties. If the gaming establishment was located in a city or town, 25 percent of the collections was allocated to the local government.
There were various reasons why gambling was re-approved in 1931, not the least of which was the dissatisfaction with the widespread illegal gambling that came into existence under the previous laws.
In a report presented to the 1960 Legislature, it was noted:
Another major factor which prompted legalized gambling was the hope that it would enhance business which had suffered severely in the nationwide depression. Another effort to attract business was the Legislature’s passage of the six-week divorce bill in 1931 after passage of a liberal divorce bill in Arkansas. Governor Balzar signed the new divorce law on March 19, the same day he signed the new gambling bill. Finally it was recognized that legalized gambling would provide an additional source of tax revenue and needed relief from other taxes. As stated by the Nevada State Journal on January 18, prior to passage of the bill, “There is a strong sentiment, particularly in Southern Nevada, that some state or municipal revenue should be derived from the games which now run on every hand with apparent sanction of public sentiment....”
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Most of the nation’s press believed Nevada’s experiment was doomed to failure. In fact, growth of the industry was slow for the first 10 years, and by 1941, gaming had increased only 49 percent (over the 1931-32 level). However, in the three-year period from 1941 through 1944, industry growth increased another 56 percent and averaged almost 19 percent for each of the three years.
That last three-year period can be considered the dividing point between
the early history and the modern era of gaming in Nevada. Modern Era of Gaming in Nevada
Nevada’s casinos catered to the local gamblers. There was no concerted effort to lure big time gamblers from out of the state. During this time, Reno and other parts of Washoe County were the leading jurisdictions, both in population and in the amount of gambling.
Las Vegas, prior to World War II, had been little more than a water stop
on the Union Pacific Railroad. Even in 1940, Clark County accounted for less than 15 percent of the state’s total population. By the mid-forties, however, a regional change was beginning. T U R N I N G P O I N T
In December 1946, the Flamingo opened outside the city limits of Las Vegas on the highway to Los Angeles. This was Nevada’s first major resort hotel casino, and it marked the turning point in the history of Nevada’s gaming industry. Today, the hotel casino resorts on the Strip and in Clark County have the dominant position in the state. N E W C O N C E P T I N L I C E N S I N G
At about the same time the style of gaming in Southern Nevada was changing, the State Legislature introduced a new concept in licensing. A state licensing requirement was enacted with fees based on a percentage of gross gaming win. This fee was in addition to the previously established county license fees, which were based on the number of games and machines to be operated.
The Nevada Tax Commission was designated as the administrative
agency under this new licensing requirement. The fees collected went into the state general fund, with a maximum of five percent of total collections set apart for administrative costs.
Aside from changes in fees, there were no major legislative changes until
1955. T H E C R E A T I O N O F T H E G A M I N G A G E N C I E S
The 1955 Legislature created the Nevada Gaming Control Board (“Board”) within the Nevada Tax Commission, whose purpose was to inaugurate a policy to eliminate the undesirable element in Nevada gaming and to provide regulations for the licensing and the operation of gaming. The Board was also to establish rules and regulations for all tax reports that were to be submitted to the state by gaming licensees.
The Board then and now consists of three full-time members who are
appointed by the Governor to a four-year term. G A M I N G C O N T R O L A C T
In 1959, the Nevada Gaming Commission (“Commission”) was created by the passage of the Gaming Control Act (“Act”). As detailed later, the
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Commission acts as the final arbiter of all licensing matters by acting on the Boarďs recommendations for licensing.
The Act laid the foundation for what would become modern gaming
regulation. The phenomenal growth of gaming in the State would not have occurred but for the foresight exhibited by Governor Sawyer and the Legislature in enacting the Act and creating the two-tiered gaming regulatory structure. G A M I N G P O L I C Y C O M M I T T E E
A Gaming Policy Board, whose exclusive purpose was to discuss matters of gaming policy, was created by legislation in 1961.
Currently, the Gaming Policy Committee (“Committee”) is an eleven-
member committee comprised of: the Governor (who chairs the Committee); one member of the State Senate; one member of the State Assembly; one member of the Nevada Gaming Commission; one member of the State Gaming Control Board; one member of a Nevada Indian tribe; and five members appointed by the Governor (two representatives of the general public, two representatives of nonrestricted gaming licensees, and one representative of a restricted gaming licensee).
The Committee meets at the call of the Governor to discuss matters of
gaming policy. Recommendations concerning gaming policy made by this committee
are advisory to the Commission. The recommendations of the Committee are not binding on the Board or the Commission in the performance of their duties.
The Nevada Gaming Commission
The Commission, created by the 1959 State Legislature, is a five-member lay body appointed by the governor to four year terms. The Commissioners serve in a part-time capacity.
The primary responsibility of the Commission is to act on the
recommendations of the Board in licensing matters. The Commission is the final authority on licensing matters, holding the power to approve, restrict, limit, condition, deny, revoke or suspend any gaming license.
The Commission is also charged with the responsibility of adopting,
amending and repealing the gaming regulations consistent with the State’s policies, objectives, and statutory purposes.
When the Board desires to impose discipline against a gaming licensee for violations of the Act or the Commission’s Regulations, the Board acts in a prosecutorial capacity and the Commission acts in a judicial capacity to decide whether the Commission will impose a sanction against a licensee for any such violations. The State Gaming Control Board
The Board is comprised of three members appointed by the governor for four-year terms, with one member acting as Chairman. The Gaming Control Act details the separate professional experience and requirements of each Board Member.3
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The Board has seven divisions: Investigations; Corporate Securities; Technology; Audit; Enforcement; Tax and License; and Administration. As of the date of this writing, the Board employs approximately 450 individuals. I N V E S T I G A T I O N S D I V I S I O N
The Investigations Division is responsible for the investigations of all individuals and privately held business entities that desire to be involved in gaming in the State of Nevada.
The Division’s staff conducts the personal and corporate investigation
process, which includes an exhaustive examination of the applicanťs personal and financial history.
C O R P O R A T E S E C U R I T I E S D I V I S I O N
The Corporate Securities Division is responsible for the investigation of publicly traded corporations that desire to be involved in gaming in the State of Nevada.
The Division is further responsible for the on-going review and monitoring of such companies after licensure, as well as monitoring all gaming activity conducted by Nevada’s licensees outside the State. T E C H N O L O G Y D I V I S I O N
The Technology Division is responsible for reviewing and testing all gaming devices and associated equipment that is deployed in the State of Nevada.
The Division’s laboratory is the oldest gaming testing facility. Testing and monitoring of gaming devices is designed to ensure the gaming patron’s confidence in the integrity of the gaming devices. A U D I T D I V I S I O N
The Audit Division is responsible for auditing Nevada’s largest licensees to ensure that all gaming revenue has been properly reported and that all related taxes have been remitted to the State.
The Division has developed minimum internal control standards for
casino accounting, and it monitors the financial operations of the gaming licensees and reports on any concerns that may impact the declared public policies. T A X A N D L I C E N S E D I V I S I O N
The Tax and License Division is responsible for reviewing the financial performance of the smaller gaming licensees and the administration of all tax and licensing matters for the Board. E N F O R C E M E N T D I V I S I O N
The Enforcement Division is the Boarďs law enforcement arm. It is charged with investigating and prosecuting criminal and administrative violations of the State’s Gaming laws.
The Division also handles customer disputes brought by gaming patrons against a gaming licensee. This ensures that the State maintains the public’s trust and confidence that gaming in the State of Nevada is conducted honestly, competitively and free of corruptive elements.
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A D M I N I S T R A T I O N D I V I S I O N The Administration Division handles the day-to-day administration of the
Board, including personnel, budget, records and file retention.
Additionally, the Division, with the Board Chairman, works with the State Legislature on the Boarďs budget and legislative matters.
Licensing and Taxation
Gaming is the primary economic industry in the State of Nevada and provides a significant amount of revenue to the state. The economic success is dependent on the effective and thorough licensing of individuals and entities involved in gaming in the State. L I C E N S I N G S T A T I S T I C S
As of June 30, 2005, there were over 2,900 licenses issued to conduct some form of gaming (or the manufacturing of gaming devices) in the State.
T Y P E S O F G A M I N G L I C E N S E S
While numerous types of licenses and approvals can be granted by the Commission, there are key gaming licenses: the nonrestricted gaming license; the restricted gaming license; the manufacturer’s license; and the slot route operator’s license.
A nonrestricted gaming license is granted for the operation of: (1) a property having 16 or more slot machines; (2) a property having any number of slot machines together with any other game, gaming device, race book or sports pool at one location; (3) a slot machine route; (4) an inter-casino linked system; or (5) a mobile gaming system.
A restricted gaming license applies to the operation of 15 or less gaming devices (and no table games) at a location.
Additionally, all manufacturers and distributors of gaming devices must
be licensed by the Commission. At http://gaming.nv.gov/publications.htm, the Board maintains a current
listing of all nonrestricted licensees, restricted licensees, licensed manufacturers, distributors and slot route operators.
The Board and the Commission also have statutory authority to require
the licensure of any individual or entity that: (1) has influence over any gaming operations in the State of Nevada; (2) shares in gaming revenues with a licensee; (3) is a lender to a gaming licensee; or (4) is the owner of land upon which gaming is conducted.
In short, Nevada requires approvals and licenses for transactions which
affect the ownership and/or control of any gaming operation in the State and for any individual who could exert any similar influence. G A M I N G T A X A T I O N
Nevada has several forms of gaming taxation: (1) a gaming tax on gross revenues; (2) an annual and quarterly tax on each gaming device; and (3) an annual and quarterly tax on tables games.
The gaming tax on gross revenues is graduated as follows:
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• 3.5% on the first $50,000 of gross gaming revenue during the month, plus
• 4.5% on the next $84,000 of gross gaming revenues, plus • 6.75% on gross gaming revenues exceeding $134,000. Gaming devices are taxed on an annual and quarterly basis as follows: • An annual fee of $250 per machine, plus • A quarterly fee of $20 per machine. Table games are taxed on an annual basis (1 game--$100; 2 games--
$200; 3 games-- $400; 4 Games--$750; 5 games--$1,750; 6-7 games--$3,000; 8-10 games--$6,000; 11-13 games--$650 per game; 14-16 games--$1,000 per game; and 17 or more games--$16,000 plus $200 for each game over 16) and a quarterly basis (1-16 games--a fee of $500 per game; 17-26 games—a fee $4,800 for each game from 17-26 games; 27-35 games--a fee $2,800 for each game from 27-35 games; and 36 or more games $100 for each game).
Under the Act, the failure to pay such taxes within 30 days will
automatically result in the surrender of the gaming license and require the immediately closure of the gaming operations.
The Board publishes a monthly report reflecting total gaming win and
percentage fee tax collections for nonrestricted licensees for the month and the comparative data from the prior year. The Abbreviated Revenue Releases from 1998 to present can be accessed at http://gaming.nv.gov/mrrindex.htm.
The Board also publishes an annual financial analysis of those nonrestricted gaming licensees producing $1 million or more in gaming revenue in the fiscal year (July 1 to June 30)4. These reports are referred to as the Annual Nevada Gaming Abstract Reports. The Annual Nevada Gaming Abstract Reports are available for the period from 1990 to present and can be accessed at http://gaming.nv.gov/abstract_rpts.htm. Conclusion
While the public policy for gaming in Nevada is only 280 words in length, it provides the core basis for the Gaming Control Act, the Nevada Gaming Commission’s Regulations and all the decisions and actions of the Board and the Commission. These decisions and actions give vital support to the integrity of Nevada’s primary revenue-generating industry and its status as the worlďs premier gaming, resort and Entertainment destination.
Revised July 2006
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Nevada Casino Minimum Internal Controls Standards (MICS)
Internal controls are essentially accounting and administrative standards designed
to safeguard ―game integrity,‖ protect assets and ensure accurate reporting of revenue.
The function of internal controls is to prevent unauthorized activity and detect deviations
from established procedures attributable to error or intentional misconduct.
The primary purpose of internal controls is two-fold: to provide game integrity
and protect assets. Casinos are subject to a greater-than-normal risk of loss from
employee or customer dishonesty because they are basically cash operations with
numerous transaction points where recording of all individual game transactions is not
practical.
Internal controls seek to minimize the risk of loss in gaming operations by using
strict procedures for the authorization, accountability and safekeeping of cash assets, such
as:
• Human controls in the form of “required supervision” and “strict segregation of
duties and responsibilities” to inhibit collusion;
• Paper controls to document key transactions for later inspection as to appropriate
signatures and other authorizations; and
• Physical safeguards such as safes, secure areas (e.g., cages and count rooms) and other
access barriers (i.e., mantraps).
Nevada first adopted minimum internal control standards (MICS) in 1968, but it did not
attempt to enforce these standards until 1982, when the board brought a disciplinary
action against a casino for noncompliance with its submitted system of internal controls
regarding the grant of credit to a patron. Although the initial case was settled without a
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determination of wrongdoing, the principle was established that casino violations of
internal controls, by themselves, could form the basis for disciplinary action even if the
violation was absent of wrongful intent by the licensee or evidence of loss attributable to
the violation.
Today, regulators routinely take action to enforce internal controls and hold
licensees accountable for noncompliance with them.
As with any regulatory scheme, legal directives and norms flow from the general
to the specific. Nevada has statutes that authorizes gaming and provided for the creation
of its‘ regulatory agencies. The State has vested those agencies with broad powers to
control gaming.
In general, however, Nevada‘s statutes leave it to the Gaming Board and/or
Gaming Commission to implement the enabling legislation through promulgation of
appropriate rules.
Promulgated rules or regulations (the terms can be used interchangeably) are the
administrative laws that govern gaming activity within the jurisdiction. The regulations
put flesh on the bones of the gaming statutes. They cannot exceed the authority granted to
the agency by the statute and cannot be inconsistent with the legislation.
Revision of regulations in most jurisdictions is an elaborate process that absorbs
time and resources. Thus, placing too much detail in regulations almost ensures frequent
revision and defeats the goal of stability. Agency regulations normally provide a process
for agency adoption of a set of minimum internal control standards.
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Once the agency has exercised its discretion to consider and adopt MICS, the
regulation will also specify requirements for the licensed operator to submit its
conforming internal control system (ICS) for approval.
The casino operating procedures are more detailed and specific to the particular
gaming operation. The ICS, however, cannot deviate from the minimum requirements
absent regulatory approval and demonstration that the procedures provide an equivalent
level of control and security.
The ICS does not provide specific directions to employees as to the exact manner
in which their duties are to be carried out.
Casinos, therefore, normally supplement the ICS with detailed standard operating
procedures (SOPs) for each individual department. SOPs also address areas of casino
operations that do not directly involve gaming activity, such as personnel policy matters
(attire, general behavior, customer service, breaks, hygiene, layoffs and grievance
procedures) and housekeeping or maintenance matters.
In general, regulators are not nearly as concerned about what a casino puts in its
SOPs, provided that the provisions do not conflict with the NRS, Gaming Board and
Commission regulations and MICS.
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The Law of the State: The Nevada Revised Statutes
The laws of the State of Nevada are contained in the Nevada Revised Statutes.
The Nevada Revised Statutes (hereafter, NRS) are the current codified laws of the State
of Nevada.
Nevada law consists of the Constitution of Nevada (the state constitution) and
Nevada Revised Statutes.
The Nevada Supreme Court interprets the law and constitution of Nevada. Nevada
Supreme Court Opinions are the written decisions of the Nevada Supreme Court.
The Statutes of Nevada are a compilation of all legislation passed by the Nevada
Legislature during a particular Legislative Session.
The Nevada Administrative Code (NAC) is the codified, administrative
regulations of the Executive Branch.
The Nevada Register is a compilation of proposed, adopted, emergency and
temporary administrative regulations, notices of intent and informational statements.
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Statutory Interpretation in Nevada
Under Nevada law, statutory interpretation is the process of interpreting and
applying legislation.
When the language of a statute is unambiguous, courts are not permitted to look
beyond the statute itself when determining its meaning. Erwin v. State of Nevada, 111
Nev. 1535 (1995).
Nevada accepts the familiar principle that "[w]hen presented with a question of
statutory interpretation, the intent of the legislature is the controlling factor and, if the
statute under consideration is clear on its face, a court cannot go beyond the statute in
determining legislative intent. Brown v. Davis, 1 Nev. 409 (1865), In re Walters‘ Estate,
60 Nev. 172 (1940), Blaisdell v. Conklin, 62 Nev. 370 (1944).
Its office has heretofore recognized that this principle has been recognized by our
courts so many times it has now become axiomatic. Attorney General‘s Opinion No. 47,
dated July 31, 1931; Attorney General‘s Opinion No. 596, dated March 29, 1948.
If, however, the statute is ambiguous, it can be construed 'in line with what reason
and public policy would indicate the legislature intended....' 'A statute or portion thereof
is ambiguous when it is capable of being understood by reasonably well-informed
persons in either of two or more senses.' Robert E. v. Justice Court of Reno Township,
664 P.2d 957, 959 (Nev.1983).
―When construing an ambiguous statute, legislative intent is controlling, and we
look to legislative history for guidance.‖ Washoe Med. Ctr. v. Dist. Ct., 122 Nev. 1298, --
--, 148 P.3d 790, 793 (2006).
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The Office of the Nevada Labor Commissioner
In 1915, the state legislature provided for the creation of the Office of the Labor
Commissioner, by enacting NRS 607.160. Pursuant to NRS 607.160, it is the duty of the
Labor Commissioner to enforce the labor laws of Nevada.
The Legislature did not vest in the Labor Commissioner the power to make new
law, only a duty to enforce the existing laws.
NRS 607.160 Enforcement of labor laws; imposition and collection of
administrative penalties; cumulative nature of penalties and remedies; claims
for wages or commissions; prosecution of claims by Attorney General.
1. The Labor Commissioner:
(a) Shall enforce all labor laws of the State of Nevada:
(1) Without regard to whether an employee or workman is lawfully or
unlawfully employed; and
(2) The enforcement of which is not specifically and exclusively vested in any
other officer, board or commission.
(b) May adopt regulations to carry out the provisions of paragraph (a).
NRS 608.270 Duties of Labor Commissioner and district attorneys.
1. The Labor Commissioner shall:
(a) Administer and enforce the provisions of NRS 608.250; and
(b) Furnish the district attorney of any county or the Attorney General all data and
information concerning violations of the provisions of NRS 608.250, occurring in the
county coming to the attention of the Labor Commissioner.
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2. Each district attorney shall, if a complaint is made to him by the Labor
Commissioner or by any aggrieved person, prosecute each violation of the provisions of
NRS 608.250 that occurs in his county. If any such district attorney fails, neglects or
refuses for 20 days to commence a prosecution for a violation of the provisions of NRS
608.250, after being furnished data and information concerning the violation, and
diligently to prosecute the same to conclusion, the district attorney is guilty of a
misdemeanor, and in addition thereto he must be removed from office. (Added to NRS by
1965, 696; A 1967, 626; 2001, 565).
NRS 608.280 Proceedings against district attorney to be instituted by Attorney
General. When a complaint is made to the Attorney General by the Labor
Commissioner or by an aggrieved person that any district attorney has been guilty of a
willful violation of NRS 608.270, the Attorney General shall make an investigation of the
complaint, and if, after such investigation, he is of the opinion that the complaint is well
founded, he shall institute proceedings against the district attorney for the enforcement of
the penalties provided in NRS 608.270. (Added to NRS by 1965, 697; A 1967, 806).
NRS 608.290 Criminal and administrative penalties.
1. Any person who violates any provision of NRS 608.250 or any regulation adopted
pursuant thereto is guilty of a misdemeanor.
2. In addition to any other remedy or penalty, the Labor Commissioner may impose
against the person an administrative penalty of not more than $5,000 for each such
violation. (Added to NRS by 1965, 697; A 1967, 626; 2003, 797).
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Gaming Definitions: The Nevada Legislature Literally Defined the Gaming Industry
The Nevada State Legislature enacted NRS Chapter 463 to address casino
licensing and control of gaming. Chapter 463 includes the legal definitions gaming and
gaming employees as used in the State of Nevada.
NRS 463.0165 “License” defined. ―License‖ means a gaming license, a
manufacturer‘s or distributor‘s license, a license issued to a disseminator of information
concerning racing or a license issued to an operator of an off-track pari-mutuel system.
(Added to NRS by 1967, 1599; A 1991, 1838; 1993, 309)
NRS 463.0169 “Licensed gaming establishment” defined. ―Licensed gaming
establishment‖ means any premises licensed pursuant to the provisions of this chapter
wherein or whereon gaming is done. (Added to NRS by 1967, 1039)—(Substituted in
revision for NRS 463.0118)
NRS 463.0171 “Licensee” defined. ―Licensee‖ means any person to whom a
valid gaming license, manufacturer‘s or distributor‘s license, license for the operation of
an off-track pari-mutuel system or license for dissemination of information concerning
racing has been issued. (Added to NRS by 1967, 1039; A 1967, 1599; 1993, 309)
NRS 463.0152 “Game” and “gambling game” defined. ―Game‖ or ―gambling
game‖ means any game played with cards, dice, equipment or any mechanical,
electromechanical or electronic device or machine for money, property, checks, credit or
any representative of value, including, without limiting the generality of the foregoing,
faro, monte, roulette, keno, bingo, fan-tan, twenty-one, blackjack, seven-and-a-half, big
injun, klondike, craps, poker, chuck-a-luck, Chinese chuck-a-luck (dai shu), wheel of
fortune, chemin de fer, baccarat, pai gow, beat the banker, panguingui, slot machine, any
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banking or percentage game or any other game or device approved by the Commission,
but does not include games played with cards in private homes or residences in which no
person makes money for operating the game, except as a player, or games operated by
charitable or educational organizations which are approved by the Board pursuant to the
provisions of NRS 463.409. (Added to NRS by 1967, 1039; A 1969, 462; 1979, 772;
1981, 1073; 1985, 2134).
NRS 463.0153 “Gaming” and “gambling” defined. ―Gaming‖ or ―gambling‖
means to deal, operate, carry on, conduct, maintain or expose for play any game as
defined in NRS 463.0152, or to operate an inter-casino linked system. (Added to NRS by
1967, 1039; A 1995, 756).
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A Gaming License is a Privilege – Not a Right
Having been issued a casino gaming license, Wynn Casino is a mere ―gaming
licensee‖ of the State of Nevada. As such, Wynn Casino has agreed to and is subject to
gaming regulation as administered by the State of Nevada. NRS 463.0171.
NRS 463.0129(2) …License or approval revocable privilege.
2. No applicant for a license or other affirmative commission approval has any right
to a license or the granting of the approval sought. Any license issued or other
commission approval granted pursuant to the provisions of this chapter or chapter 464 of
NRS is a revocable privilege, and no holder acquires any vested right therein or
thereunder.
3. This section does not:
(a) Abrogate or abridge any common-law right of a gaming establishment to exclude
any person from gaming activities or eject any person from the premises of the
establishment for any reason; or
(b) Prohibit a licensee from establishing minimum wagers for any gambling game or
slot machine. [13:429:1955]—(NRS A 1959, 434; 1967, 1597; 1969, 633; 1977, 1428;
1979, 333; 1983, 1205; 1987, 1273; 1991, 968, 2144; 1997, 1709; 1999, 949, 1412).
A gaming license is a privilege, not a right. Romano v. Bible, 169 F3d 1182
(1999).
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For the Purposes of This Discussion Floor Supervisors, Box Supervisors, Pit
Supervisors, Pit Managers, Pit Boss, Floormen, Boxman and CSTL’s, Will All Be
Referred to As “Table Games Supervisors”
For the purposes of the following discussion floor supervisors, box supervisors,
pit supervisors, pit managers, pit boss, floormen, boxman and CSTL‘s, will all be referred
to as ―table games supervisors.‖
Admittedly, the Nevada Legislature, Gaming Control Board and Gaming
Commission have certainly been more than a bit ―persnickety‖ with respect to addressing
every aspect of the gaming industry.
But casino gaming licensees are allowed to refer to these ―table games
supervisors,‖ as floor supervisors, box supervisors, pit supervisors, pit managers, pit boss,
floormen, boxman CSTL‘s or by whatever name they so desire, for purposes of their own
internal processes (i.e., employee handbooks).
However, regardless of what an individual casino licensee chooses to label these
―table games supervisors‖ internally, in the State of Nevada, by law, these employees are
either: (1) boxmen; (2) floormen; (3) supervisors; or (4) pit supervisors. (See, NRS
463.0129, Nevada Gaming Control Board – Gaming Audit Procedures Manual – Table
Games Departmental Organization, and MICS Compliance Checklist for Table Games).
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Casino Table Games Personnel – Generally
With respect to casino personnel, the five basic functions of casino executives are
game supervision, bankroll protection, credit authorization, training employees, and
hosting customers, since the customer is the most important asset to a casino, executives
should treat them with courtesy and respect.
Casino Manager: The casino manager is a department head who implements casino
policies and usually implements credit policies. He usually designs these policies in
conjunction with the credit manager. The casino manager has complete authority over -
the whole casino floor and makes final decisions on everything. His policies answer only
to the Board of Directors of -the casino.
Assistant Casino Manager: The Assistant Casino Manager executes the Casino Manager's
policies and is responsible for the operation of the casino when the Casino Manager is
absent. He also handles day-to-day responsibilities the Casino Manager delegates to him.
Shift Supervisor: The Shift Supervisor reports directly to the Casino Manager and
enforces his policies. He is responsible for the entire gaming operations for one of the -
three-eight hour shifts. The shift Boss is also directly in charge of the table games and
becomes involved with the Keno and slot operations only when a large winning payoff
must be made.
Pit Supervisor: The Pit Supervisor reports directly to the Shift Boss. He is responsible for
the operation of the casino pits. (The typical arrangement in Nevada casinos is to locate
the craps tables in one pit, the twenty-one tables in another pit, and -the baccarat tables in
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a separate pit, usually to the side of the casino). The pit boss directs only the games in his
pit and has authority only in his assigned area.
Floorman or Floor Supervisor: The Floorman is responsible for the immediate direction
and protection of specified tables within a pit, usually four to six twenty-one and roulette
tables or two craps tables. He "cases" the bankrolls on the tables for which he is
responsible. The pit or floorman at a baccarat table often sits in a high chair and is called
a "ladder man".
Boxman or Box Supervisor: The Boxman is the only executive who works at a gaming
table. He sits in the center of a craps table and sees that the game is run smoothly. He
controls the tables' chip bankroll which is stored in front of him. The Boxman also
supplies chips to the dealers and returns the chips to the bankroll when surplus chips
occur. He counts the customers' money when they want to buy chips and then inserts the
money into the "Drop Box". The Boxman accepts or rejects each "call" bet and "finger"
bet. Other duties of the Boxman are to listen to customers' disputes or claims and to settle
them unless another casino executive assumes authority. He is also responsible for -the
dice on the craps table. (Two Boxmen at each craps table are recommended for greater
protection against employee embezzlement.)
Dealer: The dealer sells chips to customers on gaming tables other than craps. He takes
losing wagers and pays winning wagers. He also deals the cards at "twenty-one" tables
and spins the ball at roulette tables.
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A Closer Look at the Employees at Issue in This Action the “Table Games
Supervisors”
A ―boxman‖ or box supervisor, is a table supervisor, who sits between the dealers
and opposite the stickman and who is responsible for the thousands of dollars worth of
chips that the casino keeps on hand at each craps table (the house bank).
―The boxman is the casino employee charged with direct supervision of the
dealers and the play at one particular table. He in turn is supervised by the pit supervisor
who is responsible for several tables.‖ Olk v. United States, 536 F2d 876 (1976).
The boxman is responsible for the casino bankroll. He protects the stacks of chips
in front of him, surveys the game and oversees the entire table. He also changes your cash
into casino chips and regularly inspects the dice to spot any defects and to safeguard the
game against crooked dice. He has to solve possible disputes between a player and a
dealer. Again, it is the boxman who guards the chips, supervises the dealers and handles
coloring out players (exchanging small chip denominations for larger denominations in
order to preserve the chips at a table).
A floorman or floor supervisor, is a supervisor. A floorman is the casino
employee responsible for the monitoring and administration of table games. Olk v.
United States, 536 F2d 876 (1976).
Their responsibilities will vary somewhat from casino to casino, but they are
generally focused on monitoring the table games to which they are assigned, to provide
assurance of integrity of the game. These responsibilities may include seating players,
assisting with cashiering services, making rulings, settling disputes, handling customer
requests, and managing the games, among other things.
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From management‘s standpoint, allowing the dealing to stop on the casino floor
is a cardinal sin. It is usually much more difficult to restart a stalled game than it is to
keep one going. If a problem arises which causes the game to stall, it is the floorman‘s
first priority to solve it, and get the game restarted.
A blackjack game can stall for any number of reasons. There can be a technical
problem like a bad deck or a broken shuffle machine. The floorman can resolve this by
replacing the broken instruments.
Another reason a game may stall is because the need arises for a ruling from the
floorman.
When a ruling is required, play can not resume until the ruling has been made.
It is common for player disputes to arise over both the technical nature of the
rules, and how those rules are meant to govern events that have occurred. There are many
situations where there is a dispute between players, and the dealer is unable to evaluate or
enforce the rules of the road.
In this case, the dealer must defer to a ―table games supervisor‖ who is authorized
to make a decision about proper procedure.
This responsibility falls on the floorman, and his decision must be accepted by all
players.
Sometimes, even when there is no dispute among the players, a ruling will be
required in order to clarify a grey area in the house rules. This means that the floorman
must be very knowledgeable about the rules of the game.
First and foremost, in the eyes of the Nevada Gaming Control Board, the
floorman must protect the integrity of the game. The Nevada Gaming Control Boards‘
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Minimum Internal Control Standards (MICS), require ―human controls in the form of
“required supervision” and “strict segregation of duties and responsibilities” to
inhibit collusion.”
This can sometimes be a balancing act. The floorman is always authorized to
make a ruling ―in the best interest of the game,‖ even if it is contrary to the house rules as
they are written.
In addition to enforcing the rules, the floorman is also responsible for handling
player requests, either directly, or by referring them out to other employees. Common
player requests include in-game cashiering services, the procuring of beverage service,
and assistance with comps and amenities.
The State of Nevada prohibits floor supervisors from accepting tips, as it would
create a conflict of interest and jeopardize the integrity of the game.
The term ―floor man‖ is gender specific because it comes from an age in which
women rarely held casino management positions. While the profession is still dominated
by men, it is not uncommon to see a woman managing the floor. For this reason, many
casinos prefer to use gender non-specific terminology, like ―floorstaff‖ or ―floor person,‖
or simply ―floor.‖ Even so, the term ―floorman‖ is a widely recognized and commonly
used by players, who can modify the gender as needed.
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The Complete List of Nevada “Gaming Employees” as Defined by the NRS NRS 463.0157 “Gaming employee” defined.
1. “Gaming employee” means any person connected directly with an operator of a slot
route, the operator of a pari-mutuel system, the operator of an inter-casino linked system
or a manufacturer, distributor or disseminator, or with the operation of a gaming
establishment licensed to conduct any game, 16 or more slot machines, a race book,
sports pool or pari-mutuel wagering, including:
(a) Accounting or internal auditing personnel who are directly involved in any
recordkeeping or the examination of records associated with revenue from gaming;
(b) Boxmen;
(c) Cashiers;
(d) Change personnel;
(e) Counting room personnel;
(f) Dealers;
(g) Employees of a person required by NRS 464.010 to be licensed to operate an off-
track pari-mutuel system;
(h) Employees of a person required by NRS 463.430 to be licensed to disseminate
information concerning racing;
(i) Employees whose duties are directly involved with the manufacture, repair or
distribution of gaming devices, cashless wagering systems, mobile gaming systems,
equipment associated with mobile gaming systems, interactive gaming systems or
equipment associated with interactive gaming;
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(j) Employees of operators of slot routes who have keys for slot machines or who
accept and transport revenue from the slot drop;
(k) Employees of operators of inter-casino linked systems, mobile gaming systems or
interactive gaming systems whose duties include the operational or supervisory control of
the systems or the games that are part of the systems;
(l) Employees whose responsibilities include performing the duties relating to the
process of registration of gaming employees that a licensee is required to perform
pursuant to the provisions of this chapter and any regulations adopted pursuant thereto;
(m) Floormen;
(n) Hosts or other persons empowered to extend credit or complimentary services;
(o) Keno runners;
(p) Keno writers;
(q) Machine mechanics;
(r) Odds makers and line setters;
(s) Security personnel;
(t) Shift or pit bosses;
(u) Shills;
(v) Supervisors or managers;
(w) Ticket writers; and
(x) Employees of a person required by NRS 463.160 to be licensed to operate an
information service.
2. ―Gaming employee‖ does not include bartenders, cocktail waitresses or other
persons engaged exclusively in preparing or serving food or beverages.
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Employer as Defined by the NRS
In Nevada, employer is also defined by statute.
NRS 608.011 “Employer” defined. ―Employer‖ includes every person having
control or custody of any employment, place of employment or any employee. (Added to
NRS by 1985, 578)
In Nevada, whether an individual is considered a supervisor depends on that
individual's authority over another employee or employees -- not merely by a title or the
employers‘ job description.
A supervisor is defined as any individual who has the authority, acting in the
interest of an employer, to cause another employee to be hired, transferred, suspended,
laid off, promoted, discharged, assigned, rewarded, or disciplined, either by taking such
action or by recommending it to a superior.
The exercise of such authority may not be of a merely routine or clerical nature,
but requires independent judgment. Nevada Department of Human Resources v. Hibbs,
538 U.S. 721 (2003). State of Alabama v. F Marshall State of Nevada, 626 F2d 366
(1980).
A managerial employee is one who represents management interests by taking or
recommending actions that effectively control or implement employer policy.
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Tips, Tokes, Tip Pooling and Being “in the Line of Service”
A tip, also called a toke, as in ―a token of gratitude, is a gratuity, a favor or gift,
usually in the form of money, given in return for service. Toke is slang for tip. In the
context of table games on the floor of a Nevada casino, a tip is a voluntary extra payment
given by a gambler to a dealer. A tip may be in the form of a casino chip, cash or any
other method used to convey something of value to the intended dealer(s).
By definition tip pooling is simple: all tip earnings of employees in the same line
of service, are intermingled and then redistributed.
―Nevada law recognizes the authority of an employer to require its employees to
pool tips as a condition of employment. Alford v. Harolds Club, 99 Nev. 670, 669 P.2d
721 (1983); Moen v. Las Vegas International Hotel, Inc., 402 F.Supp. 157 (D.Nev.1975),
aff'd, 554 F.2d 1069 (9th Cir.1977). Forced tip-sharing does not violate Nevada law or
policy, so long as the employer does not "retain any part of the tips for his own use, or
reap any direct benefit from the pooling."
Historically, casino dealers have lived off their tips, or "tokes," as in "tokens of
gratitude."
Years ago, they shared the tips they made at their tables with the other dealers
who worked with at those tables. That benefited dealers working peak hours and fostered
competition for tips. It also put pressure on players to tip dealers, who cultivated
gamblers in much the way bartenders do their good customers. At casinos where tips
were divided ―pit-for-pit,‖ the dealers definitely encouraged gamblers to tip.
In the late 1980s, a big change occurred that was adopted as the gaming industry
standard.
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The tips from the blackjack, roulette, craps and baccarat dealers were ―pooled‖
into one pot. As a result, the modern toke is no longer ―cash in the envelope‖ at the end
of a shift, but taxable income that appears on a paycheck every two weeks.
At virtually all Nevada casinos, except for Wynn Casino, the dealers collect the
money themselves under the auspices of a "toke committee."
Nevada law prohibits participation of floor supervisors, box supervisors and pit
supervisors, in dealers tip pools. NRS 608.011. (See the detailed discussion which
follows below).
Both Alford, and Cotter employed ―the line of service‖ rationale in limiting their
expansion of the dealers tip pools, to include ―dealers only. ―
However, the courts in both Moen and Alford, recognized that while an individual
employee may perform a service that contributes to a patrons overall experience, that
results in a tip, it does not mean that employee is entitled to share in the particular tip
pool in which the tip was received.
In a casino, there are many ―lines of service‖ which may or may not lead to
inclusion in a particular tip pool.
Casino dealers are not in the same line of service as valet parking; who are not in
the same line of service as doormen, spa workers, restaurant workers, housekeeping,
security, concierge services, hotel shuttle services, etc.
While each of these individuals may at times contribute to a favorable view of the
patrons overall experience, which results in a tip, they are not entitled to share in that tip,
unless they stand in the same line of service.
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Violations of the tip-pooling rules will ―poison‖ the tip pool and subject an
employer to liability for all employees who were participants in the tip pool. Similarly, if
an employer misclassifies non-tipped employees as tipped employees, liability will result
for all affected employees.
Generally, from the moment it is issued, a tip is the legal property of the person
for whom it was intended.
With respect to the Nevada gaming industry, in all casinos that require dealer tip
pooling, including Wynn Casino, any tip left by a customer, is the ―sole property of the
dealers to whom it was paid, given or left for,‖ regardless of the type of business, or the
rules imposed by the employer. NRS 608.160(1)(a).
In other words, where a tip pool has been established, as at Wynn Casino, from
the moment a tip is received by a dealer, who is a member of the tip pool, that tip legally
is owned by and belongs to, the collective members of the tip pool.
Ownership is defined as the legal right, to the possession of a thing.
By law, ownership of a tip, is directly transferred from the individual doing the
tipping (the ―tipper‖), to the recipient of the tip, here, the dealers (tip pool members).
The Wynn Casino tip pool members are the legal owners of the tips, from the
moment it is received from the ―tipper.‖ As such, at no time may Wynn Casino ever
claim ownership of the tips, or come to possess any ownership interest in the tips.
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Case Law: Moen, Alford & Cotter
Like many employers before, Wynn Casino is unlawfully seeking to divert tips
given to its‘ employees, under the guise of a ―valid tip pool.‖
Wynn Casino would have the law interpreted so as to permit an employer to use
employees tips as an alternative source of income, although in fact this is strictly
prohibited by Nevada law.
In the case at bar, Wynn Casino‘s rationale conflicts with the language of the
statute, case law and Nevada‘s legislative intent.
Similarly, other employers have long ―sought means of diverting‖ tips given to
their employees ―into their own tills.‖ Courtney Kenny, Jhering on Trinkgeld and Tips,
32 L.Q.Rev. 306, 313 (1916).
Under Nevada law, however, tips the property of the employees who receive
them. However, a federal court has held that, ―forced tip sharing does not violate Nevada
law, so long as the employer does not retain any part of the tips for his own use or reap
any direct benefit from the pooling.‖ Cotter v. Desert Palace, Inc., 402 F.Supp. 157
(1989).
In fact, Nevada case law, is even more restrictive, permitting employers to ―reap
only collateral benefits‖ from the implementation or expansion of a valid employee tip
pool. Alford v. Harolds Club, 99 Nev. 670, 669 P.2d 721(1983).
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United States District Court, D. Nevada.
Robert Wallace MOEN, Plaintiff,
v.
LAS VEGAS INTERNATIONAL HOTEL, INC., formerly known as Nevada InternationalHotel,
Inc., a Nevada Corporation, dba the Las Vegal Hilton, Defendant.
Civil No. LV-2079 BRT.
Moen v. Las Vegas Intern. Hotel, Inc. 402 F.Supp. 157 (Cite as: 402 F.Supp. 157)
Oct. 2, 1975.
MEMORANDUM OPINION
BRUCE R. THOMPSON, District Judge.
This action is before the Court on defendant's motion for a summary judgment. Jurisdiction is based upon
diversity of citizenship. It is an action which allegedly arises under a state statute and state law applies. In
essence, the plaintiff contends that in order to obtain and retain employment with defendant as a dealer in
defendant's casino, he was required to pool tips received by him with tips received by other dealers and that
such tips were then subject to division among the dealers and other employees, including boxmen, casino
cashiers and floormen. Plaintiff contends that such a condition of employment violates NRS Sec. 608.160,
which provides as follows:
‗608.160 Taking or making deduction on account of tips or gratuities unlawful; employees may divide tips
or gratuities among themselves.
‗1. It is unlawful for any person to:
‗(a) Take all or part of any tips or gratuities bestowed upon his employees.
‗(b) Apply as a credit toward the payment of the statutory minimum hourly wage established by any law of
this state any tips or gratuities bestowed upon his employees.
‗2. Nothing contained in this section shall be construed to prevent such employees from entering into an
agreement to divide tips or gratuities among themselves.‘
The foregoing statute was amended in 1971. The original Act, approved February 21, 1939 (1939 Statutes
of Nevada, p. 13), provided as follows:
‗CHAP. 17- An Act requiring persons who take from their employees all or any portion of any tips or
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gratuities, to post in a conspicuous place on their premises a notice of the terms of the contract whereby the
employer or other person is to have the benefit of any such tips or gratuities; prescribing penalties for the
violation thereof, and other matters properly relating hereto.
‗(Approved February 21, 1939)
‗WHEREAS, It has become the practice of certain employers, employing other persons in and about the
conduct and operation of their business, of taking all or a portion of any tips or gratuities given to or
received by such employees; and
‗WHEREAS, It is the sense of this legislature that such acts tend to perpetrate a fraud or imposition upon
the public because of the employers' failure to notify the public that tips or gratuities bestowed upon
employees go to the employers; and
‗WHEREAS, It is the sense of the legislature that the public should be informed of any such relation,
custom, or agreement between employer and employee; now, therefore.
‗The People of the State of Nevada, represented in Senate and Assembly, do enact as follows:
‗Section 1. Every person who takes all or any part of any tips or gratuities bestowed upon his employees, or
who credits the same toward payment of his employee's wage, shall and is hereby required to post in a
conspicuous place where it can be easily seen by the public, upon the premises where such employees are
employed and work, a notice to the public that the tips or gratuities bestowed on employees go or belong to
the employer. Such notice shall contain the words, ‗NOTICE: Tips Given Employees Belong to
Management.‘ The letters of these words shall be in bold black type at least one inch in height.
‗Sec. 2. Any person who takes all or any part of the tips or gratuities bestowed upon his employees without
posting the notice required to be posted by the preceding section shall be deemed guilty of a misdemeanor,
and upon conviction thereof shall be punished by a fine of not less than one hundred dollars, nor more than
five hundred dollars, or by imprisonment in the county jail not less than thirty days nor more than six
months, or by both such fine and imprisonment.
‗Sec. 3. This act shall be in full force and effect from and after its passage and approval.‘
The purpose of that statute is stated in the preamble and shows that it was passed to protect the public from
possible fraud. It is quite similar to California statutory provisions enacted in 1929, the substance of which
is found in West's Annotated California Codes, ‗Labor,‘ Sections 350-356. The statute has received the
106
attention of California courts in two reported cases. In Anders v. State Board of Equalization, 82
Cal.App.2d 88, 185 P.2d 883 (1947), the California District Court of Appeals concluded that even if the
notice required by the statute is not given, such failure does not render void an agreement between the
employer and employee to the effect that tips received by the employee, to the extent necessary, would be
applied in satisfaction of the obligation to pay a legal minimum wage. This holding is pertinent to our case
because it shows that the enforcement of the statute would be left to the misdemeanor penalty provisions
and that failure to comply with the statute would not invalidate the employment agreement. Similarly, the
discussion in California Drive-In Restaurant Association v. Clark, 22 Cal.App.2d 287, 140 P.2d 657
(1943), shows that under the common law of general applicability, the disposition of tips is properly a
matter for contractual determination between the employer and employee.
With this background in mind, we have for determination the proper interpretation and effect of the 1971
amendment to NRS Sec. 608.160. In making this determination, we are not aided by any reported Nevada
decisions. We have, however, been referred by counsel to the action in the Eighth Judicial District Court of
the State of Nevada, in and for the County of Clark, entitled ‗Las Vegas Casino Employees' Union, Local
No. 7, et al., Plaintiffs, vs. Sahara-Nevada Corporation, dba Hotel Sahara, Defendant,‘ Docket No.
A139598, in which the District Court granted a summary judgment for the defendant in an action similar to
the instant action and based upon the same statutory provisions. The case cited does have persuasive
authority with respect to the proper interpretation of the Nevada statute.
Bearing in mind the preamble to the 1939 statute, of which the 1971 statute was an amendment, we
conclude that in 1971, the Nevada Legislature decided that merely requiring employers to post a notice of
their agreement involving the confiscation of employees' tips was insufficient and that adequate protection
of the public against the presumed fraud involved in a taking of tips or gratuities or applying any part of
them against the statutory minimum hourly wage established by any law could not be obtained witout an
express prohibition of such practices. The Nevada Legislature, nevertheless, in subsection 2 of NRS Sec.
608.160, recognized the propriety of an agreement for the pooling and division of tips among employees. In
interpreting the 1971 statute, we note that subsection 1(a) makes it unlawful for an employer to ‗take‘ all or
part of any tips or gratuities bestowed upon his ‗employees.‘ The plural and not the singular is used. The
statute does not say that he cannot take tips bestowed on an employee. This, in connection with the section
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validating pooling agreements, indicates that so long as only employees share in the tips, the statute is not
violated. It indicates that a tip or gratuity need not be considered a personal donation to the employee
receiving it. This is a reasonable interpretation in the light of commonly known tipping practices in the
State of Nevada. There is no reason to suppose that the last person in a service line is the only one entitled
to share in the customer's bounty. For example, a busboy as well as a waitress contributes to the good
service and well-being of a customer in a restaurant. Similarly, in a casino, the floormen, boxmen and
cashiers all contribute to the service rendered to the player. Plaintiff's argument, which has to be predicated
upon the contention that the tip handed to him becomes his personal property under NRS Sec. 608.160, is
ridiculous as applied to a craps table, for example, which normally is manned by three employees, two
dealers (one of whom is a stickman) and a boxman, all of whom are active in the play of the game and the
placement and paying of bets. It is ridiculous to assume that a satisfied player who hands over a tip intends
it only for the particular person to whom the tip is given.
The evident purpose and proper interpretation of the statute is that it was enacted to prevent the taking of
tips by an employer for the benefit of the employer.
Plaintiff here complains that his employer, as a condition of employment, required him to divide tips or
gratuities among other employees. We find nothing in subdivision 2 of NRS Sec. 608.160 to prohibit this.
The subsection does not specify with whom such an agreement may be made. It does specify that only the
employees can benefit. Plaintiff would have us read the statute as follows: ‗Nothing contained in this
section shall be construed to prevent such employees from entering into an agreement with other employees
to divide such tips or gratuities among themselves.‘ An equally reasonable interpretation of the statute,
which we think is the proper one in the light of well-known employment practices, is as follows: ‗Nothing
contained in this section shall be construed to prevent such employees from entering into an agreement
with the employer or with other employees to divide such tips or gratuities among the employees.‘
Another problem inherent in the case is whether NRS Sec. 608.160 gives rise to a private action for
damages on behalf of any employee. We note that NRS Sec. 608.190 provides for enforcement by an action
for a penalty to be prosecuted in the proper court by the District Attorney of the County at the instance of
the Labor Commissioner. We also note that NRS Sec. 608.160 is part of Chapter 608 of the Nevada
Revised Statutes encompassing ‗compensation, wages and hours generally,‘ and that violations of many
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provisions of that Chapter have a criminal sanction and are made misdemeanors, and that NRS Sec.
608.140 specifically creates a cause of action for wages earned and unpaid and penalties and a reasonable
attorney's fee. No such provision is applicable to NRS Sec. 608.160.
In the foregoing context, we have in mind the decision of the Nevada Supreme Court in Hamm v. Carson
City Nugget, Inc., 85 Nev. 99, 450 P.2d 358, in which the Supreme Court held that the Nevada Dram Shop
Act, NRS Sec. 202.100, which prohibits any saloon keeper from selling liquor to a person who is drunk and
makes such conduct a misdemeanor, does not create a cause of action in favor of the person who has been
injured by the drunkard to whom liquor was unlawfully sold. In reaching that conclusion, the Supreme
Court said:
‗The statute before us is but one of many in the statutory scheme regulating the sale of tobacco and
intoxicating liquor to minors and drunkards. The section immediately preceding NRS 202.100 (NRS
202.070) does impose a limited civil liability upon the proprietor of a saloon who sells liquor to a minor.
By providing for civil liability in one section and failing to do so in the section immediately following, the
legislature has made its intention clear.‘
The general law, as found in decisions of the Supreme Court of the United States, is not inconsistent with
the conclusion that no civil right of action should be imputed from a statute which is expressly made
enforceable by a specific civil penalty or by criminal sanction. The leading cases are Wyandotte Co. v.
United States, 389 U.S. 191, 88 S.Ct. 379, 19 L.Ed.2d 407 (1967), and Cort v. Ash, 422 U.S. 66, 95 S.Ct.
2080, 45 L.Ed.2d 26 (1975). In the Wyandotte case, the Supreme Court indicated that a civil action on
behalf of private parties could be based on violation of the penal statute if the criminal liability was
inadequate to ensure the full effectiveness of the statute and the Plaintiffs fell within the class that the
statute was intended to protect and that the harm that had occurred was of the type that the statute was
intended to forestall. In that case, the Supreme Court held that a penal statute could be a predicate for a
civil action brought by the United States to recover damages for blocking a navigable waterway. In the case
of Cort v. Ash. supra, the Supreme Court held that no private cause of action for damages was created by
enactment of 18 U.S.C. Sec. 610 which made it criminal misconduct to make certain campaign
contributions. In that case, the Court called attention to the following important factors:
1. Is the plaintiff one of the class for whose especial benefit the statute was enacted?
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2. Is there any indication of legislative intent, explicit or implicit, either to create such a remedy for the
plaintiff?
3. Is it consistent with the underlying purpose of the legislative scheme to imply such a remedy for the
plaintiff?
In the Cort case, the Court answered all three questions in the negative. We think the same is true in this
case. This plaintiff is not one of a class for whose especial benefit the statute was enacted. The legislative
history shows that legislation of this type was initially passed to protect the public against a presumed fraud
and that the 1971 amendment merely established greater assurance that a customer who wanted to ‗toke‘ an
employee would not ultimately learn that he had merely enriched the coffers of the employer. We have
already indicated the statutory framework from which we have drawn an inference of legislative intent
implicity to deny a private remedy and from which we have concluded that it is inconsistent with the
underlying purposes of the legislative scheme to imply such a remedy for the plaintiff.
Plaintiff argues that there is a dispute issue of material fact in this case which precludes a summary
judgment. He contends that there is a dispute between plaintiff and defendant with respect to whether he
was required, as a condition of obtaining and retaining employment with the defendant, to agree to pool tips
with other employees. We agree that there is a dispute with respect to this issue. Our finding that summary
judgment should be granted is based upon a determination that the issue is not a material one. We believe
that NRS Sec. 608.160, as properly interpreted, does not prohibit an employer from requiring an employee
to pool tips with other employees as a condition of employment. We also believe that the Legislature of the
State of Nevada did not intend, by enactment of the amendment of 1971 to NRS Sec. 608.160, to create a
private right of action in an employee and that the legislature did intent that the sole remedy for a violation
of the statute should be an action for a penalty under NRS Sec. 608.190, subdivision (2). Accordingly.
It hereby is ordered that summary judgment be, and it hereby is, granted in favor of defendant and against
plaintiff.
END OF DOCUMENT
110
Supreme Court of Nevada.
Loretta Sue ALFORD; Stella M. Colagiovane-Archuleta; Judy Gisler; Sharon Lee; Shannon O'Roarke;
Patricia A. Seaman; Debbie Wolland; Ruth Neighoff; Susan M. Gaw; and Carol Bratcher,
Appellants,
v.
HAROLDS CLUB, Hughes Properties, Inc., Summa Corporation, Respondents.
No. 13420.
Alford v. Harolds Club, 99 Nev. 670 (Cite as: 99 Nev. 670, 669 P.2d 721)
Sept. 27, 1983.
OPINION
PER CURIAM:
The instant case presents an appeal from the involuntary dismissal of appellant employees' suit alleging a
casino employer improperly imposed a ―tip-pooling‖ agreement in violation of NRS 608.160, a provision
restricting an employer's access to employees' tips and gratuities. We hold that the district court correctly
concluded that NRS 608.160 does not prohibit an employer from requiring employees to enter into a tip-
pooling arrangement such as that imposed in the instant case. We also hold that the district court correctly
determined that there was insufficient evidence to support appellants' related claims for wrongful
termination, intentional infliction of emotional distress, fraud, conversion, and conspiracy to blacklist
appellants from the gaming industry. Accordingly, we affirm the district court's involuntary dismissal of
appellants' complaint pursuant to NRCP 41(b).
This controversy was triggered by a change in employment policy instituted by respondent Harolds Club on
January 15, 1980. Prior to that date, Harolds Club allowed its casino dealers to keep tips or gratuities
awarded them individually by customers. On January 15, Harolds Club instituted an employment policy
change and ordered dealers to ―pool‖ their tips and divide them evenly with other dealers working the same
shift. The casino did not retain any part of the pooled tips, although Harolds Club later conceded that as a
result of the change it reaped collateral benefits of higher employee morale and lower employee turnovers.
Harolds Club was apparently the last of the large casinos in northern Nevada to institute such a pooling
policy, which apparently brought the casino into conformity with general gaming industry practice
111
throughout the state.
The change in policy and the business reasons behind it were explained to employees prior to each of the
three shifts working on January 15. A number of employees had heard rumors about the impending change
and, after consulting with counsel, decided to refuse to comply with the new policy. Nine of the ten
appellants accordingly refused to comply with the new policy, and in the period between January 15, 1980
and January 17, 1980, each of these employees was fired for refusing to comply with Harolds Club's
pooling policy.FN1 FN1. One of the appellants apparently resigned of her own accord rather than await
await termination.
Less than two weeks after the first terminations, appellants filed suit claiming wrongful termination,
intentional infliction of emotional distress, fraud, conversion, and conspiracy to blacklist appellants from
the gaming industry. Appellants also alleged Harolds Club's tip-pooling policy violated NRS 608.160, a
statute which restricts an employer's access to tips and gratuities awarded employees. At trial, the district
court concluded that Harolds Club's tip-pooling policy did not violate NRS 608.160, and that there was
insufficient evidence of intentional infliction of emotional distress, fraud or conspiracy to blacklist
appellants from the gaming industry to present the case to the jury. Accordingly, the district court
dismissed appellants' suit pursuant to an NRCP 41(b) motion.
TIP POOLING AND NRS 608.160
The underlying issue presented in this appeal is whether NRS 608.160 bars Harolds Club from imposing a
tip-pooling policy as a condition of employment. The statute in question provides:
1. It is unlawful for any person to:
(a) Take all or part of any tips or gratuities bestowed upon his employees.
(b) Apply as a credit toward the payment of the statutory minimum hourly wage established by any law
of this state any tips or gratuities bestowed upon his employees.
2. Nothing contained in this section shall be construed to prevent such employees from entering into an
agreement to divide such tips or gratuities among themselves.
On its face, NRS 608.160 prohibits an employer from ―taking‖ all or part of any tips or gratuities bestowed
on his employees. The statute conditions this prohibition, however, by providing that it shall not be
construed to prevent employees from agreeing to divide tips among themselves. The issue which must be
112
addressed in the resolution of this appeal is whether NRS 608.160 prohibits the employer from unilaterally
imposing a tip-pooling agreement on employees as a condition of their employment, even though the
employer does not retain any part of the tips for his own use or reap any direct benefit from the pooling.
We have not had occasion to address whether NRS 608.160 bars an employer from imposing a tip-pooling
agreement. However, in Moen v. Las Vegas International Hotel, Inc., 402 F.Supp. 157 (D.Nev.1975),
aff'd,554 F.2d 1069 (9th Cir.1977), the court addressed an employee challenge to a tip-pooling policy
similar to the one presented in the instant case. The court conducted an extensive review of the legislative
history of NRS 608.160 and prior related legislation, and concluded: ―The evident purpose and proper
interpretation of the statute is that it was enacted to prevent the taking of tips by an employer for the benefit
of the employer.‖ 402 F.Supp. at 160. Based on this construction of the statute, the district court concluded
that NRS 608.160 did not bar the employer from imposing a tip-pooling agreement among employees as a
condition of employment. Id.
[1] Although this court is not bound by a federal district court's interpretation of a Nevada statute, we
believe that the interpretation advanced in Moen is, in light of the legislative history and well established
and commonly known Nevada employment practices, the correct one. Accordingly, the district court did
not err when it found that NRS 608.160 did not prohibit Harolds Club from imposing a tip-pooling policy
in the instant case.
INVOLUNTARY DISMISSAL UNDER NRCP 41(b)
Appellants also maintain that the district court erred in granting Harolds Club's motion for involuntary
dismissal pursuant to NRCP 41(b)FN2
on their claims for wrongful termination, intentional infliction of
emotional distress, fraud, conversion and conspiracy to blacklist appellants from the gaming industry. This
argument is without merit.
FN2.NRCP 41(b) provides, in pertinent part:
―After the plaintiff has completed the presentation of his evidence, the defendant, without
waiving his right to offer evidence in the event the motion is not granted, may move for a
dismissal on the ground that upon the facts and the law the plaintiff has failed to prove a
sufficient case for the court or jury. Unless the court in its order for dismissal otherwise
specifies, a dismissal under this subdivision and any dismissal not provided for in this rule, other
113
than a dismissal for lack of jurisdiction, or for failure to join a party under Rule 19, operates as
an adjudication upon the merits.‖
[2][3] The standard of review applicable to an involuntary dismissal under NRCP 41(b) is well established.
A defense motion for involuntary dismissal pursuant to NRCP 41(b) admits the truth of the plaintiff's
evidence and all inferences that reasonably may be drawn therefrom, and the evidence must be interpreted
in a light most favorable to the plaintiff. Baley & Selover v. All Amer. Van, 97 Nev. 370, 373, 632 P.2d 723
(1981); Humboldt Basin Newspapers v. Sunderland, 95 Nev. 794, 797, 603 P.2d 278 (1979).
[4] After reviewing the record presented on appeal, we find that even when the evidence presented is
viewed in a light most favorable to appellants, the district court did not err in concluding appellants had
failed to prove a sufficient case for the matter to go to the jury. See NRCP 41(b). As discussed above, the
district court correctly concluded that Harolds Club had the right to impose a tip-pooling policy as a
condition of employment. Given that Harolds Club had the right to insist on its employees' participation in
a tip-pooling arrangement, it is difficult to see how appellants could have been ―wrongfully‖ terminated
when they refused to comply with such a legitimate employment policy. The same conceptual difficulty
undercuts appellants' claims for intentional infliction of emotional distress, fraud, and conversion.
[5][6] Further, the district court did not err in dismissing appellants' claim for conspiracy to blacklist. As
previously noted, appellants' claim of a past and continuing conspiracy to blacklist was filed less than two
weeks after they were terminated. At trial, appellants attempted to prove the existence of a conspiracy by
offering evidence of events which occurred both before and after the complaint was filed. However, the
district court excluded the evidence of events which occurred subsequent to the filing of the complaint.
Although the district court may have erred in excluding evidence of events occurring after the complaint
was filed which were offered as evidence of a continuing conspiracy, (see Cornwell Quality Tools Co. v.
C.T.S. Company, 446 F.2d 825 (9th Cir.1971), cert. den.,404 U.S. 1049, 92 S.Ct. 715, 30 L.Ed.2d 740
(1972)), the court expressly stated that even had this proffered evidence been admitted, there still would
have been insufficient evidence to submit the case to the jury. We have reviewed the record presented,
which includes lengthy offers of proof concerning the events occurring after the complaint was filed, and
conclude that there was insufficient evidence of a conspiracy presented. The district court therefore did not
err in refusing to submit the case to the jury.
114
Those other issues raised by appellants have been considered, and are without merit. As we conclude the
district court did not err in concluding that NRS 608.160 did not bar Harolds Club from instituting the
challenged tip-pooling policy, and did not err dismissing appellants' related claims for wrongful
termination, intentional infliction of emotional distress, fraud, conversion, and conspiracy to blacklist, we
affirm the decision of the district court. END OF DOCUMENT
United States Court of Appeals,
Ninth Circuit.
Edward A. COTTER, et al., Plaintiff-Appellant,
v.
DESERT PALACE, INC., a corporation licensed and authorized to do business in the State of
Nevada, doing business as Caesar's Palace, doing business as Caesar's Palace Hotel & Casino, and
DOES I through X, inclusive, Defendant-Appellee.
No. 88-15084.
Cotter v. Desert Palace, Inc. 880 F.2d 1142 (Cite as: 402 F.Supp. 157)
Argued and Submitted June 5, 1989.
Decided July 28, 1989.
Appeal from the United States District Court for the District of Nevada.
Before FARRIS, THOMPSON and TROTT, Circuit Judges.
FARRIS, Circuit Judge:
Plaintiffs appeal from an order denying their motion for a preliminary injunction. We affirm.
BACKGROUND
The plaintiffs are professional dice dealers at Caesar's Palace Casino in Las Vegas. The dealers work in
crews of four, with each crew assigned to one dice table per shift. They are paid hourly wages by the casino
and receive customer tips, or ―tokes.‖
Prior to March 1, 1988, there was a long-standing practice at Caesar's of distributing tips on a ―crew for
crew‖ basis. At the end of each shift, the four dealers assigned to a given table would pool their tips and
divide them equally among themselves. On March 1, 1988, IRS agents entered Caesar's and executed levies
upon two dice dealers. That afternoon, Caesar's issued an interdepartmental memorandum changing its tip-
115
distribution policy. Under the new policy, dealers from all shifts are required to group all tips for a twenty-
four hour period, and then to divide the total evenly, without regard to the contributions of particular crews.
In order to implement the new policy, Caesar's directed the formation of a ―toke committee.‖ On March 20,
the dealers elected four representatives to sit on the committee. The dealers also voted to share tokes with
sick and vacationing dealers, and to establish a Medical Assistance Plan for dealers with long-term
illnesses.
On April 11, the committee informed management that it had decided on a policy of sharing tips with
boxmen-supervisory workers who occasionally fill in for dealers. Caesar's promptly rejected the proposal.
On June 27, the casino rejected a proposal by which each dealer would receive a share of tokes proportional
to his crew's contribution to the 24-hour pool. The casino has also placed restrictions on how and where the
dealers may collect, store, and distribute the tokes.
In mid-April, the committee provided management with a document entitled, ―Caesar's Palace Association
of Dice Dealers-Policies and Procedures.‖ The document stated that all dealers were ―required‖ to join the
Association, and that the object of the Association was to ―deal[ ] with the communal concerns of the Dice
Dealers that arise in the normal course of employment.‖ The document listed several functions which
would be served by the Association, including ―[m]eet[ing] with Hotel Management as requested,‖ and
―[i]nforming all Dice Dealers of any related policy and/or procedure change.‖ On April *1144 20, the
Casino responded with a memo stating that the only requirement of dice dealers was that they pool tips on a
24-hour basis, and divide them in an equitable manner. ―The toke committee is required only for the
purpose of distributing the tokes and nothing more.‖ ―Management does not intend to deal with either the
‗Association‘ or the toke committee with respect to concerns that arise in the normal course of employment
or any related policy or procedure change.‖
On March 7, 1988, 101 of the 116 dice dealers at Caesar's Palace filed suit in Nevada state court, alleging
breach of contract, deprivation of civil rights, and the creation of a mandatory labor organization in
violation of Nevada's right-to-work laws. N.R.S. § 613.130. Caesar's removed the action to federal district
court. On June 18, 1988, the district court denied plaintiff's motion for a preliminary injunction, and
granted defendant's motion to dismiss the claims based on Nevada's right-to-work laws. The court held that
these claims were preempted by the National Labor Relations Act and were within the exclusive
116
jurisdiction of the NLRB. Plaintiffs appeal from both the denial of a preliminary injunction and the
dismissal of their state right-to-work claims.
SCOPE OF THE APPEAL
We have jurisdiction to review the denial of a preliminary injunction pursuant to 28 U.S.C. § 1292(a)(1).
Dismissal of portions of a complaint, on the other hand, is an interlocutory order which is generally not
reviewable unless the trial court certifies it as final under Fed.R.Civ.P. 54(b). Atterbury v. Carpenter, 310
F.2d 126 (9th Cir.1962). The district court specifically refused to certify its dismissal of the right-to-work
claims as a final order. Plaintiffs argue that we may nonetheless review the dismissal because it is
inseparably intertwined with the decision to deny preliminary injunctive relief.
Plaintiffs rely on Marathon Oil Co. v. United States, 807 F.2d 759 (9th Cir.1986), cert. denied,480 U.S.
940, 107 S.Ct. 1593, 94 L.Ed.2d 782 (1987), where we held that an interlocutory ruling on the merits,
although normally unappealable, was ―inextricably bound up‖ with the grant of preliminary injunctive
relief, and therefore could properly be reviewed on appeal from the grant of the preliminary injunction. 807
F.2d at 764.
The rationale of Marathon Oil does not apply. In order to grant a preliminary injunction, a court must first
decide that the underlying claim has some chance of success. In that sense, a grant of preliminary relief
necessarily addresses the merits-albeit under an attenuated standard. By contrast, a court may deny
preliminary injunctive relief on grounds entirely unrelated to the merits of the underlying claim: adequacy
of monetary relief; a balance of hardships tipping in favor of the nonmoving party. The denial of
preliminary relief is thus not inextricably intertwined with an interlocutory ruling on the merits, and there
are therefore no compelling reasons to depart from the final judgment rule. We consider the merit of
plaintiffs' right-to-work claims only as an incident to our review of the denial of preliminary injunctive
relief.
STANDARD OF REVIEW
―In this circuit, preliminary injunctive relief is available to a party who demonstrates either (1) a
combination of probable success and the possibility of irreparable harm, or (2) that serious questions are
raised and the balance of hardships tips in its favor.‖ Arcamuzi v. Continental Air Lines, Inc., 819 F.2d 935,
937 (9th Cir.1987). ―As an ‗irreducible minimum,‘ the moving party must demonstrate a fair chance of
117
success on the merits, or questions serious enough to require litigation.‖ Id. The moving party must also
demonstrate at least ―a significant threat of irreparable injury.‖ Id. See also Apple Computers, Inc. v.
Formula International, Inc., 725 F.2d 521, 526 (9th Cir.1984); City of Anaheim, California v. Kleppe, 590
F.2d 285, 288, n. 4 (9th Cir.1978). The denial of a preliminary injunction is reviewed for abuse of
discretion. *1145 Zepeda v. United States, 753 F.2d 719, 724 (9th Cir.1983).
POSSIBILITY OF IRREPARABLE INJURY
Plaintiffs have identified a number of ways in which they may be injured by the tip-distribution policy:
heavily-tipped dealers will be forced to subsidize lightly-tipped dealers; forced sharing may destroy the
dealers' incentives or discourage customers from making tips; some dealers may be deprived of a once-in-a-
lifetime tip from a long-term customer who gets hot at the craps tables, some dealers may be fired for
refusing to comply with the new policy. Each of these potential injuries is purely monetary. If the new
policy is ultimately found to be unlawful, a dealer will be able to establish the amount of his loss by
keeping records of how much his particular crew collects in tips after March 1, 1988. Injuries compensable
in monetary damages are ―not normally considered irreparable.‖ Los Angeles Memorial Coliseum Com. v.
National Football League, 634 F.2d 1197, 1202 (9th Cir.1980). Because plaintiffs have not shown a
significant possibility of irreparable injury, it was not an abuse of discretion to deny preliminary injunctive
relief.
FAIR CHANCE OF SUCCESS ON THE MERITS
The denial of preliminary relief is also appropriate because plaintiffs have not demonstrated a ―fair chance
of success on the merits,‖ or ―questions serious enough to require litigation.‖
1. Breach of Contract
Plaintiffs claim that prior to March 1, 1988, Caesar's made express and implied guarantees that dice dealers
would be able to split tips on a crew for crew basis, and that the casino's unilateral decision to require 24-
hour pooling constitutes a breach of contract. At the same time, plaintiffs do not deny that they are at-will
employees-they are working without a contract. Unless the casino's decision to require 24-hour pooling
violates express statutory provisions or offends a defined public policy, see, e.g., Hansen v. Harrah's, 100
Nev. 60, 675 P.2d 394 (1984), plaintiffs' claim for breach of contract must fail.
Nevada recognizes the common law doctrine of employment at-will. K Mart Corp. v. Ponsock, 732 P.2d
118
1364 (Nev.1987). The doctrine provides that ―employment for an indefinite term may be terminated at any
time for any reason or for no reason by either the employee or the employer without legal liability.‖
Southwest Gas Corp. v. Ahmad, 99 Nev. 594, 596, 668 P.2d 261 (1983) (Justice Steffen, dissenting). An
employer privileged to terminate an employee at any time necessarily enjoys the lesser privilege of
imposing prospective changes in the conditions of employment. Albrant v. Sterling Furniture Co., 85
Or.App. 272, 736 P.2d 201,review denied,304 Or. 55, 742 P.2d 1186 (1987). Caesar's was justified in
changing the procedures by which its employees receive tips, provided that the new procedure-forced 24-
hour pooling-does not violate Nevada law or policy.
Nevada law recognizes the authority of an employer to require its employees to pool tips as a condition of
employment. Alford v. Harolds Club, 99 Nev. 670, 669 P.2d 721 (1983); Moen v. Las Vegas International
Hotel, Inc., 402 F.Supp. 157 (D.Nev.1975), aff'd,554 F.2d 1069 (9th Cir.1977). In Alford, nine employees
who were fired after refusing to participate in ―crew for crew‖ tip-sharing brought suit for wrongful
termination. The Nevada Supreme Court held: ―Given that Harolds Club had the right to insist on its
employees' participation in a tip-pooling arrangement, it is difficult to see how appellants could have been
‗wrongfully‘ terminated when they refused to comply with such a legitimate employment policy.‖ Alford,
669 P.2d at 724.
Forced tip-sharing does not violate Nevada law or policy so long as the employer does not ―retain any part
of the tips for his own use or reap any direct benefit from the pooling.‖ Id. at 723.SeeN.R.S. § 608.160.
Caesar's was therefore privileged*1146 to impose forced tip-sharing prospectively as a condition of
continued at-will employment. The trial court did not abuse its discretion in denying a preliminary
injunction.
2. Mandatory Labor Organization
Nevada Revised Statute 613.130 provides that it is unlawful for an employer to require as a condition of
employment that his employees join a ―labor organization.‖ A ―labor organization‖ is defined as:
any organization of any kind, or any agency or employee representation committee or plan, in which
employees participate and which exists for the purpose, in whole or in part, of dealing with employers
concerning grievances, labor disputes, wages, rates of pay, hours of employment, or conditions of work.
NRS 613.130. Plaintiffs argue that the toke committee is a mandatory labor organization in violation of
119
NRS 613.130. Shortly after the trial court denied plaintiffs' motion for a preliminary injunction, a regional
director of the NLRB refused to issue an unfair labor practice complaint against Caesar's Palace for its role
in forming the toke committee. The director concluded that the committee was not a ―labor organization,‖
and the NLRB dismissed plaintiffs' appeal on the same ground. We need not and do not consider the
decisions by the NLRB for purposes of this appeal. Based on our own review of the record, we conclude
that it was not an abuse of discretion to deny preliminary relief on plaintiffs' right-to-work claims.
The record does not reflect that the toke committee exists for the purpose of ―dealing with‖ casino
management. Caesar's has required a certain division of tips, and has given the committee authority to work
out the details. When the committee has made proposals outside of this narrow context, the proposals have
simply been rejected. The casino has refused to entertain serious discussion. Where an organization is
―used as a management tool that was intended to increase company efficiency,‖ it will not be considered a
labor organization despite the fact that it may provide some ―input in order to solve management
problems.‖ Sears, Roebuck & Co., 274 N.L.R.B. 230, 244 (1985).
Plaintiffs have not shown a fair chance of success on their right-to-work claims. We need not decide
whether the trial court was correct in holding that the claims were preempted by the NLRA. See Retail
Clerks International v. Schermerhorn, 375 U.S. 96, 105, 84 S.Ct. 219, 223, 11 L.Ed.2d 179 (1963).
3. Deprivation of Civil Rights
Plaintiffs claim that the new tip-distribution policy is actionable under 42 U.S.C. § 1983. In order to
succeed on the merits of a section 1983 claim, plaintiffs must show that they were deprived of a federal
right, and that Caesar's Palace was acting under color of state law. Flagg Brothers, Inc. v. Brooks, 436 U.S.
149, 155, 98 S.Ct. 1729, 1732, 56 L.Ed.2d 185 (1978).
Plaintiffs claim that Caesar's Palace was acting under color of state law because it relied on Nevada
precedent to support its right to require tip-pooling. Plaintiffs do not have a fair chance of success on this
argument. In Flagg Brothers, plaintiffs claimed that private warehousemen were acting under color of state
law because they relied on the self-help provisions of New York's version of the UCC. The Supreme Court
found this fact insufficient to transform private parties into state actors.
CONCLUSION
The trial court did not abuse its discretion in denying preliminary injunctive relief. AFFIRMED.
120
Reconciling the Case Law: Moen, Alford and Cotter
In Moen v. Las Vegas Intern. Hotel, Inc., 402 F.Supp. 157(1975), an action
brought by employee on complaint of violation of statute proscribing the confiscation of
employees' tips by employer. The Court held that hotel could properly require as a
condition of employment, that dealer in hotel's casino, pool tips received by him with tips
received by other dealers and permit division among dealers. The Court held:
―The legislative history shows that legislation of this type was initially
passed to protect the public against a presumed fraud and that the 1971
amendment merely established greater assurance that a customer who wanted to
‗toke‘ an employee would not ultimately learn that he had merely enriched the
coffers of the employer. The purpose of that statute is stated in the preamble and
shows that it was passed to protect the public from possible fraud.‖
In ―orbiter dicta‖ the Federal Court in Moen opined that floormen, boxmen and
cashiers were all in the line of service which culminated with the dealers. Though there
was no issue before the court regarding the propriety of inclusion of anyone but dealers,
in a dealers tip pool, the court in a rambling diatribe postulated,
―Though there was no issue before the court regarding the propriety of
inclusion of anyone but dealers, in a dealers tip pool, the court in a rambling
diatribe postulated,, ―there is no reason to suppose that the last person in a service
line is the only one entitled to share in the customer's bounty. For example, a
busboy as well as a waitress contributes to the good service and well-being of a
customer in a restaurant. Similarly, in a casino, the floormen, boxmen and
cashiers all contribute to the service rendered to the player. Plaintiff's argument,
121
which has to be predicated upon the contention that the tip handed to him
becomes his personal property under NRS Sec. 608.160, is ridiculous as applied
to a craps table, for example, which normally is manned by three employees, two
dealers (one of whom is a stickman) and a boxman, all of whom are active in the
play of the game and the placement and paying of bets. It is ridiculous to assume
that a satisfied player who hands over a tip intends it only for the particular person
to whom the tip is given.‖
In Alford v. Harolds Club, 99 Nev. 670, 669 P.2d 721(1983), employees sought to
recover against their employer, a casino operator, for allegedly violating a statutory
prohibition by imposing tip-pooling arrangement upon them. The Supreme Court, held
that NRS 608.160, a statute prohibiting an employer from taking all or part of any tips or
gratuities bestowed on employees, did not operate to prohibit employer from unilaterally
imposing a tip-pooling agreement on employees as a condition of their employment, as
long as employer did not retain any part of the tips for its own use or reap any direct
benefit from the pooling. The court found:
―This controversy was triggered by a change in employment policy
instituted by respondent Harolds Club. Prior to the change, Harolds Club allowed
its casino dealers to keep tips or gratuities awarded them individually by
customers. The policy change required dealers to ―pool‖ their tips and divide
them evenly with other dealers working the same shift. The casino did not retain
any part of the pooled tips, although Harolds Club conceded that as a result of the
change it reaped collateral benefits of higher employee morale and lower
employee turnovers. Harolds Club was apparently the last of the large casinos in
122
northern Nevada to institute such a pooling policy, which apparently brought the
casino into conformity with general gaming industry practice throughout the state.
The issue which must be addressed in the resolution of this appeal is
whether NRS 608.160 prohibits the employer from unilaterally imposing a tip-
pooling agreement on employees as a condition of their employment, even though
the employer does not retain any part of the tips for his own use or reap any direct
benefit from the pooling.
We have not had occasion to address whether NRS 608.160 bars an
employer from imposing a tip-pooling agreement. However, in Moen v. Las
Vegas International Hotel, Inc., 402 F.Supp. 157 (D.Nev.1975), aff'd,554 F.2d
1069 (9th Cir.1977), the court addressed an employee challenge to a tip-pooling
policy similar to the one presented in the instant case. The court conducted an
extensive review of the legislative history of NRS 608.160 and prior related
legislation, and concluded: ―The evident purpose and proper interpretation of the
statute is that it was enacted to prevent the taking of tips by an employer for the
benefit of the employer.‖ 402 F.Supp. at 160. Based on this construction of the
statute, the district court concluded that NRS 608.160 did not bar the employer
from imposing a tip-pooling agreement among employees as a condition of
employment. Id.
Although this court is not bound by a federal district court's interpretation
of a Nevada statute, we believe that the interpretation advanced in Moen is, in
light of the legislative history and well established and commonly known Nevada
employment practices, the correct one. Accordingly, the district court did not err
123
when it found that NRS 608.160 did not prohibit Harolds Club from imposing a
tip-pooling policy in the instant case.‖
In Cotter v. Desert Palace, Inc. d/b/a Ceasars‘ Palace 402 F.Supp. 157(1989),
dealers sued employer to prevent casino from adopting a forced tip-sharing policy. Prior
to March 1, 1988, there was a long-standing practice at Caesar's of distributing tips on a
―crew for crew‖ basis. On March 1, 1988, Caesar's issued an interdepartmental
memorandum changing its tip-distribution policy. Under the new policy, dealers from all
shifts are required to group all tips for a twenty-four hour period, and then to divide the
total evenly, without regard to the contributions of particular crews. Caesar's Palace
defended the new policy as it was acting under color of state law because it relied on
Nevada precedent to support its right to require tip-pooling. The court held:
―Nevada law recognizes the authority of an employer to require its
employees to pool tips as a condition of employment. Alford v. Harolds Club, 99
Nev. 670, 669 P.2d 721 (1983); Moen v. Las Vegas International Hotel, Inc., 402
F.Supp. 157 (D.Nev.1975), aff'd, 554 F.2d 1069 (9th Cir.1977). Forced tip-
sharing does not violate Nevada law or policy so long as the employer does not
"retain any part of the tips for his own use or reap any direct benefit from the
pooling." Id. at 723. See N.R.S. Sec. 608.160. Caesar's was therefore privileged to
impose forced tip-sharing prospectively as a condition of continued at-will
employment.
Caesar's was justified in changing the procedures by which its employees
receive tips, provided that the new procedure…does not violate Nevada law or
policy.‖
124
Recurring Themes That Bind Moen, Alford and Cotter
(1) “NRS 608.160, is a statute prohibiting an employer from taking all or
part of any tips or gratuities bestowed on employees” and to protect
the public against possible fraud.
The courts in all three cases agreed, first and foremost with regard to NRS
608.160, ―The legislative history shows that legislation of this type was initially passed to
protect the public against a presumed fraud and that the 1971 amendment merely
established greater assurance that a customer who wanted to ‗toke‘ an employee would
not ultimately learn that he had merely enriched the coffers of the employer. The purpose
of that statute is stated in the preamble and shows that it was passed to protect the public
from possible fraud.
In Alford, regarding NRS 608.160, the Supreme Court of Nevada held, ―The
evident purpose and proper interpretation of the statute, is that it was enacted to prevent
the taking of tips by an employer for the benefit of the employer.‖ 402 F.Supp. at 160.
The Court added ―NRS 608.160, is a statute prohibiting an employer from taking all or
part of any tips or gratuities bestowed on employees‖; and of the federal district court's
interpretation of the Nevada statute, ―We believe that the interpretation advanced in
Moen is the correct one, in light of the legislative history and well established and
commonly known Nevada employment practices.
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(2) An employer shall not reap any “direct benefit” from tip pooling.
In adopting the court‘s rationale regarding tip pooling in Moen, the Nevada
Supreme Court held that an ―…employer shall not retain any part of the tips for its own
use; or (2) reap any direct benefit from the pooling. Alford, Id.
The court strongly emphasized the importance that ―Harolds Club, only reaped
collateral benefits of higher employee morale and lower employee turnovers‖ and that
―the change brought Harolds Club, into conformity with general gaming industry practice
throughout the state‖. In Cotter, the court held that ―Caesar's Palace was acting under
color of state law instituting the new policy as it because it relied on Nevada precedent,
that required dealers to share with other dealers.‖
The court noted, ―Forced tip-sharing does not violate Nevada law or policy so
long as the employer does not ―reap any direct benefit from the pooling and provided that
the new procedure does not violate Nevada law or policy.
(3) Tip pooling must be of employees in “the same line of service” and
comply with the requirement of conformance with commonly known
Nevada employment practices.
In 1975, the federal court in Moen acknowledged there exists a ―line of service‖
in a casino which culminated with the dealers.
Both Alford, (which adopted the Courts‘ finding in Moen), and Cotter employed
―the line of service‖ rationale in limiting their expansion of the dealers tip pools, to
include ―dealers only.‖
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However, the courts in both Moen and Alford, recognized that while an individual
employee may perform a service that contributes to a patrons overall experience, that
results in a tip, it does not mean that employee is entitled to share in the particular tip
pool in which the tip was received.
In a casino, there are many ―lines of service‖ which may or may not lead to
inclusion in a particular tip pool.
Casino dealers are not in the same line of service as valet parking; who are not in
the same line of service as doormen, spa workers, restaurant workers, housekeeping,
security, concierge services, hotel shuttle services, etc.
While each of these individuals may at times contribute to a favorable view of the
patrons overall experience, which results in a tip, they are not entitled to share in that tip,
unless they stand in the same line of service.
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Regulating the Casino Floor
Let us now turn our attention to the Nevada casino gaming floor, specifically with
respect to table games. This segment focuses on Nevada‘s regulatory processes regarding
casino gaming, specifically, the table games floor, which is highly regulated.
Once a casino applicant receives a Nevada gaming license, the licensee remains
under the scrutiny of the State, and its operations are subject to review, audit and
regulation. It is important to monitor and regulate casino operations. Elements of
effective casino control typically relate to generally uniform rules of the games, effective
oversight by casino supervisors, viable surveillance and regulatory oversight
The first element of effective control in casino operations relates to a system of
minimum internal controls (MICS) requiring uniform and defined rules of the game for
each game offered on the casino floor.
Uniform substantive rules of the game permit casino supervisors and regulators to
identify any deviations, which may indicate cheating or tampering with the games.
Perhaps nothing is more vital to effective casino control than effective oversight of the
table games by casino supervisors. These ―table games supervisors‖ are crucial to
maintaining the integrity of the games. The Nevada Gaming Control Boards‘ Minimum
Internal Control Standards (MICS), require these ―table games supervisors‖ to be ―human
controls in the form of “required supervision” and further require “strict segregation
of duties and responsibilities” to inhibit collusion.”
The second aspect of casino control relates to safeguards designed to protect
casino assets. To the extent possible, MICS should establish accountability of casino
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revenues and pinpoint areas and individuals responsible for such funds during the gaming
day.
The State of Nevada legalized gambling in 1931, long before any of the existing
crop of gaming licenses were issued. The integrity of every aspect of Nevada‘s gaming
industry, is the result of decades of effort, and regulators will insure that its integrity is
not sacrificed by radical changes to their regulatory framework.
Based on seventy nine years dedicated to the refinement of casino regulation, the
Legislature of the State of Nevada is without question the foremost authority in the
United States, with respect to the gaming industry. It is with that vast experience and
knowledge of every aspect of casinos and of casino regulation, that the Nevada State
Legislature enacted NRS 463.0157, which defines the complete list of ―gaming
employees‖ within the state. ―Boxman‖, ―Dealers‖, ―Floormen‖ and ―Supervisors‖, are
defined as gaming employees.
The Nevada Legislature regulates gaming within the state, via the Nevada
Gaming Control Board and the Nevada Gaming Commission. Early on, the Legislature
established that all gaming licensees must provide assurance of the ―integrity of table
games,‖ by requiring supervision, independent of the dealers.
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The Role of the Table Games Supervisor in Gaming Today
In the State of Nevada, casino table game play has changed dramatically over the
last 20 years. The table games department is no longer the center of a casinos activity.
Table games are no longer the main reason that most people come to casinos. In most
casinos, table games are just one of many attractions. Nevada casinos of today have been
re-labeled as "entertainment venues" and table games are just one part of the
entertainment package.
The ―table games supervisor,‖ who was once an asset to any formidable table
game department in days past, is now a liability to the growth and performance of the
modern day table games department.
Over the years, casinos throughout Nevada discovered that most ―table games
supervisors‖ were hurting table games performance, instead of enhancing its operation.
Modern day casino patrons are not the ―high rollers‖ or ―big time‖ players of yesteryear.
Make no mistake, every single Nevada casino still covets the ―high rollers,‖ however,
studies have shown modern day casino patrons are ordinary people, looking to have a
good time. Gaming industry research tells us these modern day ―gamblers‖ come in for
the social environment that table games present.
That is why most Nevada casinos have changed the focus of the ―table games
supervisor,‖ to have them assist in making the players experience as pleasant as possible,
so as to insure that a player plays as long as possible and returns to the tables as often as
possible. Throughout the gaming industry, there has been a conscious effort on the part of
casino management to make the job description of a ―table games supervisor,‖ more
conducive to the needs of the player.
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However, as a legislative creation, ―gaming employees‖ are defined by statute.
NRS 463.0157.
As previously stated, the Nevada Legislature regulates gaming within the state,
via the Nevada Gaming Control Board and the Nevada Gaming Commission. Early on,
the Legislature mandated that all gaming licensees provide assurance of the integrity of
their table games, by providing supervision of all their table games. Currently, the
Nevada Gaming Control Board‘s requirements for internal controls (MICS) mandate
supervision of all table games, to provide assurance of ―integrity of the game.‖ Nevada
Gaming Control Board, Minimum Internal Control Standards (MICS) Compliance
Checklist for Table Games.
This supervision is provided by the ―table games supervisor,‖ in the form of either
a floor supervisor, box supervisor or pit supervisor. NRS 463.0157. It is these ―table
game supervisors‖ who are charged with the responsibility of maintaining ―game
integrity.‖ Pursuant to the Nevada Gaming Control Boards‘ Minimum Internal Control
Standards (MICS), require these ―table games supervisors‖ are the ―human controls in the
form of “required supervision” and further require “strict segregation of duties and
responsibilities” to inhibit collusion.”
Regardless of what their employer calls them, in Nevada, by law, they are either:
floormen, boxmen, or supervisors. NRS 463.0157(1)(b)(m)(v).
Regardless of what their job description says, these ―table games supervisors‖ are
required by the Nevada Gaming Control Board to ―provide supervision of all table
games.‖ Nevada Gaming Control Board, Minimum Internal Control Standards (MICS)
Compliance Checklist for Table Games.
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Nevada gaming regulators have a vested interest in keeping the casino industry
free of gaming integrity scandals, which would compromise public trust and jeopardize
the State‘s interests.
Generally speaking, ―table game supervisors‖ are the first level of supervision that
is responsible for the management and operation of one or more casino table games.
While the casino industry has changed immensely over the years, the role of the ―table
games supervisor,‖ has changed very little.
In today's ultra competitive gaming world, the needs of the table games
department have changed. While assurance of table games integrity, still mandates that
the ―table games supervisor‖ account for procedural correctness and for general
accountability, a third function has been added and even stressed by casino management,
to insure growth in table games.
In an effort to achieve continued growth, senior casino management has revised
operating philosophies and articulated a new vision in regards to table games. They are
now focusing on retooling table games pits, with ―table games supervisors‖ who not only
understand the numbers and how they work, but who also understand the nature of the
people who play table games.
Box supervisor, floor supervisor, pit supervisor, ―table games supervisor,‖ casino
pit supervisor, ―CSTL‖ or whatever you choose to call them, they must be part of the
developing casino culture that stresses player enjoyment.
Wynn Casino has embraced this movement. While the Nevada Gaming Control
Board mandates that to assure ―integrity of the game,‖ there must be table games
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supervision at all times, Wynn Casino has made it the job of these supervisors to act less
like police and to the extent possible, create a pleasant experience for all players.
Now instead of staring at the customer, sweating over every winning bet,
sometimes in groups of two or more pit bosses, they now interact and communicate with
the player. The goal is to try to build a rapport with the customer, to develop a
relationship, to make the customers feel like they know someone in the casino. The
ultimate result is the creation of a fun atmosphere in keeping with the idea of the new
table games environment.
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In Nevada Casinos, Ensuring the Integrity of the Game is the Primary
Responsibility of the “Table Game Supervisors,” Specifically: Floor Supervisors,
Box Supervisors and Pit Supervisors
The Nevada Gaming Control Boards‘ requirements for internal controls (MICS),
mandates casino supervision of all table games, to provide assurance of ―integrity of the
game.‖ As previously stated, this supervision is provided by the ―table games
supervisor,‖ which can be either in the form of a floor supervisor, box supervisor or a pit
supervisor, pursuant to NRS 463.0157.
―Table games supervisors‖ are held to the highest standard of ethical conduct,
because of their obligation to provide for ―integrity of the game‖ on the table games to
which they are assigned. They are the unbiased arbiters of any disputes that arise between
the gambler and the casino. What this means is, that no player receives an unfair
advantage over the other players.
Ensuring ―integrity of the game,‖ is the responsibility of the ―table game
supervisors‖ because of the crucial role they play, in relation to the gamblers and the
dealers; that is, to make sure the games are run properly; to make sure that neither the
players nor the dealers are doing anything they are not supposed to do. Their secondary
function is to account for the games performance, including: how much the game takes
in; the amount of the drop; who is winning; and other related issues.
Every table game on a casino floor involves the dealer, the players and ―table
game supervisors.‖ Table game supervisors are charged with the responsibility of
―impartially‖ resolving disputes on the games to which they were assigned. Their
function can be compared to that of a referee at a boxing match; they are neutral,
impartial arbiters.
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For either a referee at a boxing match, or a casino ―table games supervisor,‖ to be
allowed to accept a tip or gratuity would legitimately give rise to concerns of a ―conflict
of interest,‖ as well as give the appearance of impropriety.
For example, when a ruling is required, play can not resume until the ruling has
been made. It is common for player disputes to arise over both the technical nature of the
rules, and how those rules are meant to govern events that have occurred. There are many
situations where there is a dispute between players, and the dealer is unable to resolve the
issue, or is part of the issue. In this case, the dealer must defer to a supervisor who is
authorized to make a decision about proper procedure. This responsibility falls on the
―table games supervisor,‖ and his decision must be accepted by all players. Sometimes,
even when there is no dispute among the players, a ruling will be required in order to
clarify a grey area in the house rules. This means that the supervisor must be very
knowledgeable about the rules of the game.
With respect to protecting the ―integrity of the game,‖ a table games supervisor‘s
responsibilities mirror those of a referee at a boxing match. Specifically: (1) a table
games supervisor must know the rules of the game to which they are assigned; (2) when
called upon, a table games supervisor must make fair and impartial decisions; and (3)
above all else, accept no tip or gratuities in connection with the discharge of their duties.
The State Legislature in its‘ infinite wisdom with respect to the gaming industry,
adopted this approach and mandated that these principles be strictly enforced to protect
―gaming integrity.‖ Consequently, the State of Nevada prohibits ―table games
supervisors‖ from accepting tips, as it would create a conflict of interest and jeopardize
the integrity of the game.
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This is the current Nevada gaming industry standard: a ―table games supervisor,‖
regardless of what their employer calls them, floor supervisor, box supervisor, pit
supervisor, CSTL, etc., are not authorized to receive tips.
In arriving at this gaming industry standard, the State serves notice to the world,
that Nevada recognizes the need to preserve and encourage confidence in the
professionalism of table games supervision. This confidence must first be fostered within
the "community" of casinos statewide and then within the public generally.
The Nevada Legislature believes that public confidence in the ―integrity of table
games‖ rests on the integrity and ethical conduct of each individual casino statewide. The
future and well-being of the gaming industry within Nevada is hinged upon this concept
of gaming integrity.
Accordingly, ―table games supervisors‖ must be free of obligation to any interest
other than the impartial and fair in judging the controversies that arise before them.
Without equivocation, game decisions which are slanted by personal bias are dishonest
and unacceptable.
As their employers, Nevada casinos, as well as the ―table games supervisors,‖
must recognize that anything which may lead to a conflict of interest, either real or
apparent, must be avoided. Tips, tokes, gifts, favors, which can compromise the
perceived impartiality of a ―table games supervisors‖‘ decision making, are prohibited.
―Table games supervisors‖ have an obligation to treat patrons with professional
dignity and courtesy. ―Table games supervisors‖ have a responsibility to continuously
seek self-improvement through study of the game, rules, mechanics and the techniques of
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game management. Nevada casino licensees, like Wynn Casino, receive the collateral
benefit of asset protection from ―table games supervisors.‖
―Table games supervisors‖ must protect the public from inappropriate conduct
and shall attempt to eliminate from the table games to which he is assigned, all practices
which bring discredit to it. This duty carries with it an obligation to perform with
accuracy, fairness and objectivity through an overriding sense of integrity.
Table game supervisors must protect the players, casino patrons, from fraud or
deception and insure the integrity of table games on the casino floor.
Consequently, it is be prohibited for any casino ―table games supervisor,‖ or any
other casino floor employee who shall serve in a supervisory position to solicit or accept,
any tip or gratuity from any player or patron at the casino where he is employed.
These ―table games supervisors‖ have always been charged with customer service
responsibilities. However, under Nevada law, having the responsibility to resolve
disputes on the table games to which they were assigned, meant these ―table games
supervisors‖ were not allowed to receive tips, as it would create a conflict of interest and
compromise the table games integrity.
To further insure that its‘ intentions were not disregarded with respect to tips and
table game supervisors, the Nevada Legislature addressed that issue by enacting NRS
608.011, which deems these ―table games supervisors‖ to be employers, under the statute.
As statutory employers, ―table games supervisors,‖ that is, floor supervisors, box
supervisors and pit supervisors, are prohibited from participating in the dealers tip pool.
NRS 608.160.
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Again, this is the current Nevada gaming industry standard: a ―table games
supervisor,‖ regardless of what their employer calls them, are not authorized to receive
tips. There is no other way to provide any assurance of integrity of table games. Despite
all the technological advancements in casino surveillance techniques, this remains the
Nevada gaming industry standard for assurance of the integrity of table games.
According to statistics compiled by the Nevada Gaming Commission, casinos
recognize that a major threat to their profitability is theft. To deter theft, many casinos
have instituted internal control policies that are verified by regular casino surveillance
audits. Large casinos with adequate staff are also training designated personnel to form
permanent casino surveillance and auditing teams. Surveillance of the casino floor is
regulated by Nevada Gaming Commission Regulation 5.160(2).
But make no mistake about it, these surveillance measures have been instituted by
the casinos, for their own benefit. Their primary purpose is to prevent theft, to protect the
assets of the casino. Proper internal controls let casinos operate efficiently while allowing
investigative personnel to detect theft, fraud, or other abuses in each segment of the
casino property.
While casino surveillance technology has improved, because of the lack of table-
side microphones, in the absence of ―table games supervisors,‖ a veritable laundry list of
unlawful and unwelcome activity would go undetected, including ―tip hustling.‖ This
further emphasizes the need for ―human controls in the form of ―required supervision,‖
that is ―table games supervisors‖ and the additional requirement of ―strict segregation of
duties and responsibilities‖ to inhibit collusion,‖ pursuant to MICS.
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STATE OF NEVADA
GAMING CONTROL BOARD
GAMING AUDIT PROCEDURES MANUAL
Current as of October 1, 2000 for all sections except Entertainment
which is current as of November 13, 2009
INTRODUCTION
The ―Gaming Audit Procedures Manual‖ (GAP Manual) is a compilation of definitions,
descriptions and general terminology used in the Minimum Internal Control Standards, CPA
MICS Compliance Checklists and Internal Audit Compliance Checklists developed by the
Gaming Control Board. Additionally, the GAP Manual includes various policies and procedures
used by the Board in performing routine full compliance audits of all Group I casinos in Nevada.
The purpose of this manual is to assist casino accounting and auditing personnel in
complying with the myriad of gaming laws and regulations currently in effect. The information
in this manual will be updated periodically, and new versions of the manual will subsequently be
issued. However, due to the frequency with which gaming laws and regulations change, the most
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current version of the GAP Manual may not always be up-to-date. It is the responsibility of each
casino to ensure compliance with all gaming laws and regulations currently in effect.
Overview of MICS Adoption Process
Regulation 6.090 ―Internal control for Group I licensees‖ requires each licensee to
establish administrative and accounting procedures for the purpose of determining the
licensee‘s liability for taxes and fees under chapters 463 and 464 of the Nevada Revised
Statutes and for the purpose of exercising effective control over the licensee‘s internal
fiscal affairs.
The State of Nevada Gaming Control Board has adopted Minimum Internal
Control Standards (MICS) pursuant to Regulation 6.090(5) as the minimum requirements
for internal controls over gaming operations. It is the licensee‘s responsibility to read and
review the MICS in order to prepare a written system of internal control delineating
detailed operating procedures that comply with the MICS. Additionally, the licensee is to
ensure that their employees are trained to comply with the MICS in conducting their daily
gaming operations.
The written system of internal control is also to be reviewed by an independent
accountant. The independent accountant is required to confirm annually, in writing, that
the system complies with the requirements of Regulation 6.090, which includes the
MICS.
Subsequent amendments to the written system of internal control are to be made
in accordance with Regulation 6.090 (10) and (11). Regulation 6.090(11) was amended
on May 22, 2003 to allow licensees to annually report any amendments to the licensee‘s
procedures and written system that were not previously reported pursuant to Regulation
6.090(10).
The effective date for each section of the Minimum Internal Control Standards is
indicated in the index. Additionally, all sections are Version 6 regardless of the section‘s
previous version number. The date licensees must be in compliance with each section of
the MICS is also indicated in the index. The licensee may only implement internal
control procedures that do not satisfy the MICS if a variation is granted by the Board
Chairman, in writing, as allowed by Regulation 6.090(8).
The Nevada Gaming Control Boards‘ Minimum Internal Control Standards
(MICS) for Table Games is 26 (twenty six) pages in length. There are no less than 33
(thirty three) references to the requirement of table games supervision.
INDEX
SECTION
VERSION #
RELEASE DATE
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Slot Revenue
1 10/01/00
Table Games Revenue
1 10/01/00
Card Games Revenue
1 10/01/00
Keno Revenue
1 10/01/00
Bingo Revenue
1 10/01/00
Race & Sports Revenue
1 10/01/00
Pari-Mutuel Wagering
1 10/01/00
Entertainment Revenue
2 11/13/09
Cage & Credit
1 10/01/00
Electronic Data Processing
1 10/01/00
Miscellaneous Regulations
1 10/01/00
TABLE GAMES REVENUE
TABLE GAMES TERMINOLOGY
The following terminology is applicable to table games revenue:
24-hour shift A casino may request and receive Board approval to operate on a 24-
hour shift in the pit department.
Call bet A vocal credit bet made by a patron. A credit instrument is completed
at the conclusion of the playing of the hand or the call of the dice
should the customer lose the bet. The purpose of a call bet is to allow
the patron to begin play immediately. This includes "heeled" or
"marked" bets which are advanced by the licensee for double downs,
splits or certain craps bets.
Credit slip A form used to record the amount of money or chips removed from a
table game (i.e., table tray), or the transfer of IOU's, markers, or other
credit instruments from a table game to the cashier's cage.
Cross fill Transfer of cash and/or chips from one gaming table to another. If this
procedure is used, the licensee must use adequate documentation.
Drop The total amount of money, chips and tokens contained in the table
drop boxes.
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Drop box A locked container permanently marked to indicate game, table number
and shift. All markings must be clearly visible at a distance of 20 feet.
The container must be locked to the table, separately keyed from the
container itself. All monies exchanged for chips or credit instruments
at the table and other such items or documents as management may
direct pertaining to transactions at the table must be put into the
container.
Fill slip A form used to record the amount of money or chips furnished to a
table game (i.e., table tray) from the cashier's cage.
Games summary
(stiff sheet)
A form used to record, by shift and day, the individual table games
winnings and/or losses. The form reflects the total count of opening
and closing table top inventories, fills and credits, drop and win/loss per
gaming table.
Lammer button
(marker button)
A numbered, chip like implement placed on the gaming table indicating
the amount of house chips that have been removed from a table tray
during a table credit slip transaction, or an amount of chips that has
been given to a customer for wagering on credit prior to completion of
a credit instrument.
Lottery NRS 462.105. Lottery means any scheme for the disposal or
distribution of property, by chance, among persons who have paid or
promised to pay any valuable consideration for the chance of obtaining
that property, or a portion of it, or for any share or interest in that
property upon any agreement, understanding or expectation that it is to
be distributed or disposed of by lot or chance, whether called a lottery,
raffle or gift enterprise, or by whatever name it may be known. The
term lottery does not include a promotional scheme conducted by a
licensed gaming establishment in direct association with a licensed
gaming activity, contest or tournament. All lotteries except for
charitable lotteries are illegal in Nevada.
Rim credit Extension of credit that is not evidenced by an immediate preparation
of a marker but does not include a call bet. All such extensions and
subsequent repayments are recorded individually on a prenumbered
document (e.g., player card).
Soft count The procedure for counting the total amount of currency and chips
removed from the drop boxes; the amount counted is entered onto the
games summary (stiff sheet).
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Soft count keys Drop box release keys
Drop box storage rack keys
Drop box contents keys
Count room keys
Duplicate keys
Keys used to remove drop boxes from
table and card games tables.
Keys used to open storage area where
table drop boxes are kept after removal
from tables and prior to the count of
their contents.
Keys used to gain access to the
contents of table games drop boxes.
Keys used to gain entrance to the room
designated for the counting of the
contents of table games drop boxes.
Duplicate keys to the above four
sensitive areas. Duplicate keys should
be maintained in such a manner as to
provide the same degree of control as
is exercised over the original keys.
Statistical drop Drop as defined by Regulation 1.095 plus marker credit slips plus pit
credit repaid with chips.
Statistical win Table games gross revenue as defined by Regulation 6.110 plus
marker credit slips.
Table top inventory
(bankroll)
The total of coin and house chips in the table rack. If markers are part
of the table inventories at the end of a shift, they should not be included
in the bankroll figures used to calculate gross revenue. Table top
inventory may be maintained at an imprest amount or the amount may
fluctuate.
Vigorish
(commissions)
A commission (usually 5-10% of the wager) charged and retained by
the casino for certain bets, including betting on the banker‘s hand in
baccarat and buy and lay bets in craps (similar to a rake in poker).
DEPARTMENTAL ORGANIZATION
A table games shift is generally staffed by the following people:
The casino manager (sometimes known as the property shift manager or as "#1") has
ultimate authority over the entire casino during his shift.
The table games shift manager has authority over all table games and card games for
one shift. Some casinos do not use this level of authority.
The pit shift supervisor/pit floorperson (pit boss) has authority over one pit or a certain
designated number of tables. This level authorizes fills and credits.
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The dealer is responsible for his table and for the accuracy of any paperwork that he
drops in his drop box during the shift.
The pit clerk is a position that is frequently used in conjunction with computerized pit systems.
Pit clerks generally obtain requests for table fills and credits from pit supervisory personnel, input
the information into the computer system, return the original requests to the supervisor and
forward copies of the requests to the cage at the end of each shift. They are often also responsible
for inputting marker information into the computer system. This includes determining that the
customer has available credit, that the printed markers are properly completed, and that signed
markers are securely maintained in the pit until they are transferred to the cage. Pit clerks can
also be responsible for inputting player rating information in the computer system.
GENERAL
It is important for the auditor to understand how table game revenues flow through a licensee‘s
operations so that the audit can be properly planned and performed. The actual flow of revenue
generally begins when a player approaches a table and buys into a game with cash. The cash
buy-in is displayed in public view on the table and is then exchanged for chips from the table
inventory tray. The cash is then dropped into the table's drop box by the dealer. Each table's drop
box is required to be permanently marked with the game, shift, and a number corresponding to a
permanent number on the table.
Sometimes, instead of purchasing chips, a patron will place a cash wager. NRS 463.307 requires
that gaming be conducted with chips/tokens or other instrumentalities approved by the Board or
legal tender of the United States. Licensees may accept foreign currency at the tables as long as
certain procedures specified in the Minimum Internal Control Standards (MICS) are followed.
Winning cash wagers are paid with chips. Losing cash wagers are dropped in the drop box.
During a shift, the table tray inventory may need to be replenished (filled) with chips from the
cage. It is also possible that the table tray may accumulate too many chips of one or more
denominations. In this case, chips are sent (credited) from the table to the cage. These transfers
are controlled by forms called fill slips or credit slips, respectively. Fill and credit slips are
generally prepared by a cage cashier. The standard slips are 3-part, serially-numbered forms.
One copy is retained by the cage to facilitate end-of-shift balancing. One copy is dropped in the
drop box. The third copy is "restricted" (protected) in some way to prevent subsequent alteration.
At the end of each shift, as the drop team is bringing empty drop boxes to the pit for the
upcoming shift, the out-going and in-coming pit shift supervisors begin to count the inventory of
chips in the table trays. If these table inventory counts are to be dropped, they are documented on
two-part table inventory forms. After these forms are completed and signed, someone other than
a shift supervisor (e.g., a dealer or security personnel) drops one part of the forms (also known as
the ―closer‖) into the drop boxes of the ending shift. The drop team then begins removing the full
drop boxes from the tables and replaces them with the empty ones. The second part of the table
inventory forms (also known as the ―opener‖) is then placed in the empty boxes, again by
someone other than the pit supervisors. The drop is completed after the drop team transports and
secures the full boxes in the soft count room. If the closing/opening count form is not dropped,
the form is delivered to the cage or the soft count team to be recorded on the stiff shift prior to or
in conjunction with the soft count.
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The above information is meant to provide the auditor with a general overview of how table game
revenues flow through a casino‘s operations. It is important that the auditor read the casino‘s
internal control system, submitted to the Board, which describes in significant detail how revenue
flows through a casino‘s operations.
SOFT COUNT
Each day the soft count team members enter the count room to count the funds in the drop boxes.
They then either record on, or trace to, the count sheets the drop, fill/credit, marker issue stub and
opening/closing table inventory amounts. Even licensees with computerized soft counts are
required to record or trace these amounts. The reason for this is that only soft count personnel
can attest to the fact that these monies and documents did indeed come out of the drop boxes.
Hence, all soft count members are required to sign the count sheet as proof of their attestation.
The Minimum Internal Control Standards require that the count team be independent of the
transactions being counted and reviewed and the subsequent accountability of the soft drop
proceeds. As points of clarification, it is acceptable for a dealer to count drop proceeds from the
same shift in which he dealt cards. A cage cashier may be used; however, this person may not
perform the recording function or accept the count proceeds into cage accountability. If a cage
manager is used, the count team must also report to someone independent of the cage as well as
the pit department. Additionally, the standards allow an accounting representative to participate
so long as an independent audit of the soft count documentation is performed.
Occasionally, employees of an independent security firm will act as the "observer". Employees
of independent firms are not required to be included on the licensee's Regulation 6.130 count
team submission. Furthermore, these individuals are not required to carry a gaming work card
because, pursuant to the provisions of NRS 463.0157, they are not considered gaming employees.
After the count team has completed the count, cage or vault personnel count the drop proceeds
and accept the funds into the cage‘s accountability. The count that cage or vault personnel
performs must be independent of any counts that the count team performs. Cage or vault
personnel may verify the drop by counting the currency in bundles; however, a sample of bundles
should be broken down and counted.
The count team then delivers the count sheet and supporting paperwork (e.g., count sheets,
fill/credit slips, table top inventory forms and any other documentation associated with the
generation of table games revenue) to the accounting department. After the documents are
audited, table games revenue is then posted to the accounting records (e.g., revenue journal or
general ledger). At the end of the month the licensee uses these accounting records to prepare the
tax report.
GROSS REVENUE CALCULATIONS
Regulation 6.110 defines table games gross revenue as "closing bankroll plus credit slips for
cash, chips or tokens returned to the casino cage, plus drop, less opening bankroll and fills to the
table." Revenue for all table games is computed by this method.
Per the above definition, table games gross revenue would be calculated as follows:
Closing Bankroll +
145
Credit Slips (for cash, chips or tokens) +
Drop (per Regulation 1.095(1)) +
Opening Bankroll -
Fill Slips -
-------
Equals Gross Revenue (Loss) + or -
If the licensee makes final fills/credits to bring table bankrolls up/down to a standard (imprest)
amount, then closing and opening table bankrolls would have no effect on reported win. It is also
important to note that the above gross revenue calculation does not include credit instruments.
In the computation of gross revenue pursuant to NRS 463.3715 there are certain items which may
or may not be deducted as losses. Any prizes, premiums, drawings, benefits or tickets that
are redeemable for money or merchandise or other promotional allowance, except money or
tokens paid at face value directly to a patron as the result of a specific wager, must not be
deducted as losses from winnings at any game except a slot machine. The amount of cash paid
to fund periodic payments may be deducted as losses from winnings for any game. A licensee
may deduct its pro rata share of a payout from a game played in an inter-casino linked system;
additionally, cash prizes and the value of noncash prizes awarded during a contest or tournament
conducted in conjunction with an inter-casino linked system are deductible on a pro rata basis.
See the ―Inter-casino Linked Systems‖ section for a further discussion of deductions related to
these systems.
Pursuant to NRS 463.0161 the term ―gross revenue‖ does not include:
a. Counterfeit facsimiles of money, chips, tokens, wagering instruments or wagering credits;
b. Any portion of the face value of any chip, token or other representative of value won by a
licensee from a patron for which the licensee can demonstrate that it or its affiliate has not
received cash;
c. Cash taken in fraudulent acts perpetrated against a licensee for which the licensee is not
reimbursed;
d. Cash received as entry fees for contests or tournaments in which patrons compete for prizes,
except for a contest or tournament conducted in conjunction with an inter-casino linked
system;
e. Uncollected baccarat commissions; or
f. Cash provided by the licensee to a patron and subsequently won by the licensee, for which
the licensee can demonstrate that it or its affiliate has not been reimbursed.
INTER-CASINO LINKED SYSTEMS
Inter-casino linked table games systems are simply table games at multiple locations which are
linked to a common non-progressive or progressive jackpot or multiple-location player
tracking/bonusing systems (excluding player tracking run by a licensee solely for its affiliates).
Some inter-casino linked systems are owned and operated entirely by affiliated casinos. Others
are operated by a third party for numerous affiliated or unaffiliated casinos. The overall revenue
accounting for inter-casino linked systems is really no different than it is for any other table
game. Drop is still the total amount of money, chips and tokens contained in the table drop
146
boxes; fills are all the fills made to the table trays; and payouts are all the cash awards made to a
patron on a winning wager.
NRS 463.3715(5) became effective June 22, 1995. This statute specifically allows licensees to
deduct their pro rata share of a payout from a game played in an inter-casino linked system except
for a payout made in conjunction with a card game. This means that all payouts (including the
non-progressive ones that licensees are reimbursed for) associated with the system are deductible.
The amount of the deduction must be based upon the written agreement among licensed gaming
establishments participating in the inter-casino linked system and the operator of the system.
Additionally, all cash prizes and the value of noncash prizes awarded during a contest or
tournament conducted in conjunction with an inter-casino linked system are also deductible on a
pro rata basis to the extent of the compensation received for the right to participate in that contest
or tournament. A participating licensee must have had an active gaming license at any time
during the month in which a payout was awarded to be entitled to a deduction. If large
progressive payouts are paid out over time, pursuant to Regulation 5.115, only the amount of
cash used to fund the payout may be deducted from revenue.
FREE PLAY AND PROMOTIONAL ITEMS
The authoritative bases for the tax treatment of free play and promotional items can be found in
NRS 463.0161, NRS 463.3715 and Regulation 6.110. The following chart summarizes the
accounting treatment of some typical promotional items:
Item Proper Accounting Treatment
Match Play (e.g., wager $5 and receive a $10
bet)
Only cash received in drop, deduct all
payouts
Discount Wagering (Negotiable) If distinguishable, discounted $ amount in
drop, deduct all payouts
Discount Wagering (Nonnegotiable) Discounted $ amount in drop, deduct all
payouts
Free Play Wagering (Negotiable) If distinguishable, $0 in drop, deduct all
payouts
Free Play Wagering (Nonnegotiable) $0 in drop, deduct all payouts
Promotional Activity Reimbursed by a Third
Party
Total $ amount wagered in drop, deduct all
payouts
Tournaments/Contests/Drawings No effect on revenue if not part of an inter-
casino linked system
Tournaments which include elements of a
normal wager
Total $ amount WAGERED in drop, deduct
payouts but not tournament prizes**
Use of this tax treatment is allowable only if specific record keeping requirements are
adhered to.
** Pursuant to NRS 463.408, tables placed on the floor specifically for this type of tournament
are subject to a $14 per table, per day Special Events permit fee, whereas existing tables that are
used for this type of tournament are subject to all quarterly and annual flat fees.
STATISTICAL ANALYSIS
A statistical analysis of table games performance is done to detect any possible problem areas. A
win/drop percentage for table games is the relationship of a patron‘s chip buy-in (made with cash
147
or marker) and cash wagers dropped in the drop box to what the casino wins back from the patron
through table play. If markers are immediately transferred to the cage after issuance, with no
payments allowed in the pit, the drop figure will contain the dollar amount of cash wagers
dropped in the drop box plus cash and markers received by the casino in exchange for chips.
In Nevada, however, customers can pay off markers in full or in part in the pit, and payments can
be made with cash or chips. As a result, cash drop may be overstated due to cash payments for
markers, and the marker issues may be overstated because additional markers may have been
issued in exchange for other markers during a consolidation or during marker partial payments.
The concepts of statistical win and statistical drop were developed to eliminate these
overstatements.
Statistical win is simply table gross revenue as defined by Regulation 6.110 (which is basically
cash win) plus marker credit slips. Marker credit slips are added to win because, in effect, they
represent a portion of the table game's ending inventory (a component of the win computation)
which is not otherwise reflected in revenue computed in accordance with Regulation 6.110.
Statistical drop is equal to cash drop, as defined by Regulation 1.095, plus marker credits plus pit
marker payments in chips. Statistical drop should only reflect pit credit issued for the purchase of
chips, which can be calculated as follows:
Marker +
credit slips
Pit marker +
payments in chips
Pit marker =
payments in cash
Pit credit
issued for chips
Cash drop, as defined by Regulation 1.095, already contains pit marker payments in cash.
Therefore, for statistical drop to reflect all pit credit issued for chips, it is necessary to increase
cash drop by marker credit slips and pit marker payments in chips.
Licensees report statistical information to the Board on the "Monthly Gross Revenue Statistical
Report" (NGC-31). This form requires (by type of table game) pit credit issues, pit credit
payments in chips, pit credit payments in cash, and drop as defined by Regulation 1.095.
IN-HOUSE PROGRESSIVE PAYOFF SCHEDULES
Regulation 5.110 addresses in-house progressive payoff schedules. The regulation states that
progressive payoff schedules may have limits. Also, the payout indicators (progressive meters)
cannot be turned back except for a payout to a customer, the meter going over the progressive
limit, or a documented malfunction. The progressive amounts may be transferred to a similar
game but this must also be documented. Progressive payoff schedules may be given away
through a concluding contest, tournament or promotion if conducted with a game similar to the
game from which the amounts are distributed. For the purposes of auditing gaming
establishments, no work typically needs to be done with regard to inter-casino linked progressive
payoff schedules - this responsibility lies with the operator of the system.
148
State of Nevada
Gaming Control Board
CPA MICS Compliance Checklist
TABLE GAMES
General Walk-Through
All Procedures
Licensee Review
Period
NGC Regulation 6.090(9) requires the CPA to use ―criteria established by the chairman‖ in determining
whether a Group I licensee is in compliance with the Minimum Internal Control Standards (MICS). This
checklist is to be used by the CPA in determining whether the licensee‘s table games operation is in
compliance with the Table Games MICS.
Checklist Completion Notes:
1) Unless otherwise instructed, examine a completed document for compliance for those Questions
referring to records/documentation as indicated and recalculate where appropriate. Indicate (by
tickmark) whether the procedures were confirmed via examination/review of documentation, through
inquiry of licensee personnel or via observation of procedures. Tickmarks used are to be defined at the
bottom of each page.
2) All "no" answers require referencing and/or comment, and should be cited as regulation violations,
unless the Board Chairman has granted a MICS variation or the question requires a "no" answer for
acceptability. All ―N/A‖ answers require referencing and/or comment, as to the reason the MICS is
not applicable.
3) "(#)" refers to the Minimum Internal Control Standards for Table Games, Version 6.
Minimum Internal Control Standard Notes
Note 1: Throughout the table games section all references to dealers include craps boxmen.
Note 2: For any Board-authorized applications, alternate documentation and/or procedures that provide at
least the level of control described by these standards will be acceptable.
Note 3: The term ―shift‖ as used in these MICS refers to an interval of 8 hours, 24 hours or other division
of a 24-hour day. For MICS requirements in which the date and shift is to be recorded, if a 24-
hour shift is utilized, the indication of the date is sufficient. The length of the shift used in the
table games area is delineated within the table games section of the written system of internal
control pursuant to Regulation 6.090. A multiple compartment table game drop box may be used
when more than one shift is used in a day, which will result in multiple shifts with only one table
games drop each day.
Note 4: Procedures for pit customer deposit withdrawals (i.e., CDW‘s) must provide the same degree of
control as is provided for markers.
Date of Inquiry
Person Interviewed
Position
Auditor‘s Name and Date
149
Questions Yes No N/A Comments, W/P Reference
1. Has the licensee‘s written system of internal control for table
games been read prior to the completion of this checklist to
obtain an understanding of the licensee‘s table games operation?
2. Does the licensee issue markers in the pit?
3. Does the licensee issue other instrumentalities (i.e., ―Customer
Deposit Withdrawal‖ forms, etc.) that evidence withdrawals of
front money or safekeeping in the pit?
Note: If the answer is ―yes‖ to either questions 2 or 3, complete
the Table Games Walk-Through Checklist for Marker Credit Play
Procedures.
Fill and Credit Standards
Note: If a computerized system is used, the procedures to safeguard
manual fill and credit slips must comply with the fill and credit MICS
#49 - #65 in the event of system failure. (Note before 49)
Testing of fills and credits is required for Questions 4 – 24, as
applicable. Select all fill forms and all credit forms for one shift
(with a maximum of 30 for each type of form) per day for 2 days.
Test days should be in non-consecutive months. Indicate test
dates selected and results of testing.
4. Are fill/credit slips in at least triplicate form, used in a continuous
numerical series, and prenumbered or concurrently numbered in a
manner such that each slip has a unique identification number?
(49)
5. Are manual unissued and issued fill/credit slips safeguarded and
are adequate procedures employed in the distribution, use and
control of same? (50)
Note: Consideration should be given to the following factors:
are the unissued forms securely stored to prevent unauthorized
access; is a log maintained to record the serial numbers of the
forms issued to the cage department; and are the used forms
subsequently reconciled to the issued slips with investigations
being performed for any missing slips.
6. For manual fills/credits are personnel from the cashier or pit
departments precluded from having access to the locked box
copies of the fill/credit slips? (51) State the departments that:
control the keys to the locked machines; that must be present
when the machines are being repaired or refilled; that
removes the used fill/credit slips.
7. For a computerized fill/credit system, is one part stored in the
computer system in such a manner that prevents pit, cage and
other unauthorized personnel from accessing and making changes
to the stored information? (51) State manner (e.g., password
controlled)
150
Questions Yes No N/A Comments, W/P Reference
8. When a fill/credit slip is voided, are the following procedures
performed: does the cashier clearly mark void across the face of
the original and first copy; does the cashier and one other person
sign both the original and first copy adjacent to the void
indication; and are the forms submitted to the accounting
department for retention and accountability? (52)
9. For computer-generated fill/credit slips that are voided, is the
computer system updated to reflect the voided fill/credit
transaction? (52)
10. Are fill transactions authorized by a pit supervisor prior to the
issuance of the fill slips and the transfer of chips, tokens, and/or
monetary equivalents? (53)
11. When table credits are transacted, is an order for credit prepared
to accompany the chips, tokens and/or monetary equivalents
(e.g., credit instruments, coin) being transferred from the pit to
the cashier area or other secure area of accountability? (54)
Note: If chips, tokens, and/or monetary equivalents are
transported accompanied by a credit slip, an order for credit is not
required. (54)
12. When an order for credit is prepared to accompany the chips,
tokens and/or monetary equivalents transferred, is a duplicate
copy of the order for credit retained in the pit to compare to the
credit slip for proper entries and to document the total amount of
chips, tokens, and/or monetary equivalents removed from the
table? (55)
13. Are at least three parts of each fill/credit slip utilized as follows:
a) For a fill is one part transported to the pit with the chips,
tokens and/or monetary equivalents and, after the appropriate
signatures are obtained, deposited in the table game drop
box? (56a)
b) For a credit, is one part transported to the pit by the runner
who brought the chips, tokens, and/or monetary equivalents
from the pit to the cage, and after the appropriate signatures
are obtained, deposited in the table game drop box? (56a)
c) For both fills and credits, is one part retained in the cage for
reconciliation of the cashier bank? (56b)
d) In a manual system, is one part of the fill/credit retained
intact by the locked machine in a continuous unbroken form?
(56c)
e) In a computerized system, is one part stored in the computer
system? (56c)
14. Is the part of the fill/credit slip that is placed in the table game
drop box a different color for fills than for credits, unless the type
of transaction is clearly distinguishable in another manner? (57)
Indicate the method used.
Note: The checking of a box on the form is not considered a
clearly distinguishable indicator. (57)
151
Questions Yes No N/A Comments, W/P Reference
15. For both manual and computerized fills/credits, is the table
number, shift, and amount of fill/credit by denomination and in
total noted on all copies of the fill/credit slip? (58)
16. For manual fills/credits, is the correct date and time indicated on
at least two copies? (58)
17. For a computerized system, do all copies include the date and
time? (58)
18. If the credit slip (manual or computerized) is for the transfer of a
marker to the cage at a time other than for a mass marker transfer
(see MICS #66 - #69), does the credit slip and order (if used) also
include the marker number(s), patron‘s name, amount of each
marker(s), the total amount transferred, signature of the pit
supervisor releasing the instrument from the pit, and the signature
of the cashier verifying receipt of the instrument at the cage?
(58)
19. Are table credits/fills carried to/from the cashier‘s cage by an
individual who is independent of the transaction? (59) State
who can perform the runner function.
20. Are the fill/credit slips signed by at least the following
individuals to indicate that each has counted the amount of the
fill/credit and the amount agrees with the fill/credit slip or, in the
case of markers, reviewed the items being transferred:
a) The cashier who prepared the fill slip and issued the chips,
tokens, and/or monetary equivalents, or who prepared the
credit slip and received the chips, tokens, and/or monetary
equivalents transferred from the pit? (60a)
b) The runner who carried the chips, tokens, and/or monetary
equivalents from the cage to the pit, or who carried the
chips, tokens, and/or monetary equivalents transferred from
the pit to the cage and returned to the pit with the credit
slip? (60b)
c) The dealer who received the chips, tokens, and/or monetary
equivalents at the gaming table, or who had custody of the
chips, tokens, and/or monetary equivalents prior to transfer
to the cage, or in the case of marker credits the dealer who
inserted the credit slip into the table game drop box? (60c)
d) The pit supervisor who supervised the fill/credit transaction?
(60d)
Note: A credit slip is not required when completing a mass marker
transfer at the end of the day (refer to MICS #‘s 66-69 for the
documentation required for mass marker transfers), which are
addressed in the Table Games Walk-Through Checklist for Marker
Credit Play Procedures. A credit slip is only required for individual
credit instruments transferred from the pit to the cage when a mass
marker transfer form is not used. (60)
152
Questions Yes No N/A Comments, W/P Reference
21. Are chips, tokens, and/or monetary equivalents received in a fill
transaction either broken down or verified by the dealer in public
view before the dealer places the chips, tokens and/or monetary
equivalents in the table tray? (61)
22. Are chips, tokens and/or monetary equivalents removed from the
table tray by the dealer during a table credit transaction and are
they either broken down or verified by the dealer in public view
prior to placing them in the racks for transfer to the cage? (62)
23. Are fill/credit slips inserted in the table game drop box by the
dealer? (63)
24. Are chips, tokens and/or monetary equivalents deposited on or
removed from gaming tables only when accompanied by the
appropriate fill/credit slip or mass marker transfer
documentation? (64)
25. Are cross-fills in the pit prohibited unless fill and credit slip
documentation is used and are even money exchanges in the pit
prohibited unless a transfer document is used? (65)
Check Cashing in Pit
26. If traveler‘s checks/guaranteed drafts are allowed to be presented
at a table game, are all required issuance and acceptance
procedures adhered to by the drawee and pit personnel and are
they inserted in the table game drop box by the dealer after the
chips are issued to the patron? (26)
27. Are personal checks, cashier‘s checks and payroll checks cashed
in the pit? If the answer is yes, then answer the remaining
questions within this heading. If the answer is no, then these
questions should be marked as N/A. (Note after 26)
28. Prior to cashing a check in the pit, does the employee issuing the
credit perform the following procedures:
a) Verify the patron‘s identity by examining the patron‘s
identification credential (e.g., driver‘s license) or other
method to ensure the patron‘s identity and document the
information on the check, unless the information is
maintained elsewhere (in such cases, ―I.D. on file‖ or the
patron‘s account number is recorded on the check as the
verification source and results)? (27a)
b) For personal checks, verify the patron‘s credit worthiness
pursuant to Regulation 6.120(2)(a) and record the
verification source and results on the check? (27b)
Note: For patrons that have an active established credit limit
pursuant to Cage and Credit MICS #1, verification of the
patron‘s credit worthiness is not required. ―Account on file‖
is recorded as the verification source and results. (27b)
c) For payroll checks, make a reasonable effort to verify
business authenticity? (27c)
153
Questions Yes No N/A Comments, W/P Reference
d) Make a reasonable effort to verify the authenticity of
cashier‘s checks for amounts over $1,000? (27d)
Note: Standards 27(a)-27(d) do not apply if a check guarantee
service is used to guarantee payment of an instrument and the
procedures required by the check guarantee service are followed. (27)
29. Are all checks cashed in the pit transferred to the cashier‘s cage
(accompanied by a credit slip or a two-part order for credit) by an
individual who is independent of the transaction immediately
following the acceptance of the instrument and issuance of the
chips? (28)
30. Do the credit slip procedures used for transferring checks from
the pit to the cage comply with MICS #‘s 49-65? (28)
31. Once a check has been transferred from the pit to the cage, are
any subsequent payments transacted and recorded at the cage?
(29)
Foreign Currency
32. Does the licensee accept foreign currency in the pit? If the
answer is yes, then answer the questions within this heading. If
the answer is no, then answer these questions as N/A.
33. Are foreign currency transactions authorized by a pit supervisor
who completes a foreign currency exchange form prior to the
exchange for chips or tokens? (30)
34. Do the foreign currency exchange forms mentioned in the
preceding question include the country of origin, total face value,
amount of chips/tokens extended (i.e., conversion amount),
signature of the supervisor and the dealer completing the
transaction? (31)
35. Are the foreign currency exchange forms and the foreign
currency inserted in the table game drop box by the dealer? (32)
Call Bets
Note 1: A call bet is a vocal wager made without a patron wagering
chips or cash and includes marked bets (which are supplemental bets
during a hand of play).
Note 2: If call bets are allowed, inquire as to the procedures in the
craps, twenty-one, and baccarat pits. Describe any differences in the
comments column of each question.
Inquiries of Questions 36 – 44 should be made in the craps,
twenty-one and baccarat pits.
36. Does the licensee allow call bets? If the answer is yes, complete
the questions within this heading. If the answer is no, then
answer these questions as N/A.
154
Questions Yes No N/A Comments, W/P Reference
37. Is a call bet evidenced by the immediate placement of a lammer
button, chips, or other identifiable designation in a specific
location on the table in an amount equal to that of the wager?
(33)
38. Is the placement of the lammer button, chips, or other identifiable
designation performed by supervisory personnel? (34)
Note: The placement may be performed by a dealer only if the
supervisor physically observes and gives specific authorization.
(34)
39. Is the call bet settled at the end of each hand of play by the
preparation of a marker, an entry on a rim card, repayment of the
credit issued, or the payoff of the winning wager? (35)
40. Are additional call bets extending beyond one hand of play,
without proper settlement of the first call bet, prohibited? (35)
41. For the purpose of settling a call bet in craps, is a hand of play
defined as a natural winner (e.g., a seven or eleven on the come-
out roll), a natural loser (e.g., a two, three or twelve on the come-
out roll), a seven-out, or the patron making his point, whichever
comes first? (Note before 33)
42. Do the lammer buttons remain on the table until the call bet is
paid with chips or cash or results in the issuance of a marker?
(36)
43. For call bets settled via an entry on a rim card, do the lammer
buttons remain on the table until the rim credit is paid, is
transferred to another table, or a marker is issued? (36)
44. Upon completion of the call bet transaction, are the lammer
buttons moved from the table into the table tray by the dealer or
moved to a neutral area by the dealer for subsequent removal by
pit supervisory personnel? (37)
Rim Credit
Note: Rim Credit is an issuance of
credit in exchange for chips that is not
evidenced by the immediate
preparation of a marker but is recorded
on a patron‘s rim card. (Note before
38)
155
Questions Yes No N/A Comments, W/P Reference
Inquiries for Questions 45 – 56 should be made in the craps,
twenty-one and baccarat pits.
Testing of rim credit is required for Questions 45 – 56, as
applicable. Select all rim cards for one shift (with a maximum of
15) per day for 2 days. Test days must be in non-consecutive
months. Indicate test dates selected and results of testing.
45. Does the licensee allow the use of rim credit? If the answer is
yes, then answer the questions within this heading. If the answer
is no, then answer these questions as N/A.
46. Is rim credit evidenced by the issuance of chips to be placed in a
neutral zone on the table and then extended to the patron for the
patron to wager, or to the dealer to wager for the patron, and by
the immediate placement of a lammer button or other identifiable
designation in an amount equal to that of the chips extended with
the lammer buttons remaining on the table until the rim credit is
paid or a marker is issued? (38)
47. Is a separate rim card created for each patron‘s activity at each
table and for each shift? (41)
48. Is each rim credit balance increase/decrease recorded
immediately on patron‘s rim card that contains:
a) Prenumbering or concurrent numbering? (42a)
b) The date and time of balance increase/decrease? (42b)
c) The dollar amount of each balance increase/decrease? (42c)
d) An indication of one or more of the following types of
balance increases:
i) Issuance of rim credit (e.g., chips given to the patron)?
(42d1)
ii) Transfer of rim credit balance from another table with
the date, time and amount of the transfer being
documented on the rim cards at both tables with
appropriate cross-referencing of rim card numbers?
(42d2)
iii) Transfer of rim credit balance from the previous shift
with the date, time and amount of the transfer being
documented on the rim cards with appropriate cross-
referencing of rim card numbers? (42d3)
e) An indication of one or more of the following types of
balance decreases:
i) Payment in cash? (42e1)
ii) Payment in chips? (42e2)
iii) Issuance of a marker with the marker serial number and
amount of the marker being indicated? (42e3)
156
Questions Yes No N/A Comments, W/P Reference
iv) Transfer of the rim credit balance to another table with
the date, time and amount of the transfer documented on
the rim cards at both tables with appropriate cross-
referencing of rim card numbers? (42e4)
v) Transfer of the rim credit balance to the next shift with
the date, time and amount of the transfer documented on
the rim cards with appropriate cross-referencing of rim
card numbers? (42e5)
f) The signatures of a supervisor and the dealer attesting to the
validity of each balance increase/decrease including the
transfer of an outstanding rim credit balance from another
table? (42f)
g) The outstanding rim credit balance? (42g)
49. Are the following procedures performed for each balance
increase/decrease recorded on the patron‘s rim card:
a) Do the supervisor and dealer compare the actual lammer
buttons on the gaming table to the outstanding rim credit
amount on the patron‘s rim card? (43)
b) Are any discrepancies between the actual lammer buttons
evidencing outstanding rim credit on the table and the rim
credit recorded on the rim card investigated? (43)
c) Are the results of such investigations documented and
retained? (43)
50. If a patron transfers his outstanding rim credit balance from one
table to another table and the chips are transferred from one table
inventory to another table inventory, are the following procedures
performed (the chips are required to be transferred for transfers of
$10,000 or more):
a) Are chips for the dollar amount equal to the outstanding rim
credit balance removed from the new table inventory and
transferred to the original table inventory (the table with the
outstanding rim credit)? (39a)
b) Are lammer buttons for the dollar amount of the chips
removed from the inventory and transferred to the original
table placed by the dealer at the new table to evidence the
amount of outstanding rim credit? (39b)
c) Do the lammer buttons remain on the original table with the
outstanding rim credit until the chips have been received
from the new table to replenish the original table‘s
inventory? (39c)
d) When the chips are received from the new table, do the
dealer and a supervisor verify the dollar amount of the chips
to the outstanding rim credit indicated on the rim card and
does the dealer remove the lammer buttons after the chips
have been verified and placed into the table inventory? (39c)
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Questions Yes No N/A Comments, W/P Reference
e) Are the patron‘s rim cards updated immediately to indicate
the transfer of outstanding rim credit from table to table?
(39d)
f) Does the rim card from the original table accompany the
chips being transferred from the new table to the original
table? (39d)
g) Is a new rim card prepared at the new table indicating the
transfer of rim credit from a prior table? (39d)
51. If a patron transfers his outstanding rim credit balance of less
than $10,000 from one table to another table and chips are not
transferred from one table inventory to another table inventory,
are the following procedures performed:
a) Is the patron‘s rim card updated immediately to indicate the
transfer of outstanding rim credit from table to table? (40a)
b) Are the lammer buttons on the original table with the
outstanding rim credit removed by the dealer after the rim
card has been updated to indicate the transfer of outstanding
rim credit? (40b)
c) Are lammer buttons placed by supervisory personnel on the
new table where the outstanding rim credit balance has been
transferred after the rim card has been updated to indicate the
transfer of outstanding rim credit from another table? (40c)
52. Is an outstanding rim credit balance reduced to zero (i.e.,
payment collected or marker issued) no later than when the
patron leaves the table at which the card is prepared unless the
rim card balance is transferred to another table, the table remains
open and fully staffed while the patron is away from the table, or
the table closes and the procedures indicated in MICS #45 are
performed? (44a-c)
53. Does an individual independent of the table games department
(e.g., security, pit clerk if not a pit department employee) perform
the following procedures when a table closes with an outstanding
rim credit balance:
a) Is the rim card and lammer buttons secured at the table until
the rim credit balance is reduced to zero (i.e., payment
collected or marker issued) or the patron returns to the table?
(45a)
b) Is the rim card reconciled to the lammer buttons evidencing
the outstanding credit issuances upon closing and again
when the table reopens? (45b)
c) Is the total balance of outstanding rim credit documented on
the rim cards reconciled to the rim credit balance carried on
the table inventory document at each shift end? (45c)
d) Are surveillance cameras dedicated to the closed table with
outstanding rim credit and do the recorded views include the
table tray and the area where the lammer buttons
representing rim credit are placed? (45d)
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e) Are the recorded videotapes mentioned in the preceding
question maintained for a minimum of seven days? (45d)
54. Is the outstanding rim credit reduced to zero through the issuance
of a marker or payment in full by the patron within seven days
from the last date of recorded patron rim credit activity? (46)
55. Are rim cards with zero balances transferred to the accounting
department on a daily basis by an individual independent of the
rim credit transactions? (47) State who performs this function.
56. Is the total rim credit paid in the pit with chips by the patron
summarized by table on a daily and monthly basis? (48)
Miscellaneous
57. Are new and used playing cards and dice not yet issued to the pit
maintained in a secure location to prevent unauthorized access
and reduce the possibility of tampering? (127) Indicate the
location and method of storage.
58. Are used playing cards and dice that are not to be reused properly
canceled and removed from service? (127)
59. Do pit supervisory personnel (with authority equal to or
greater than those being supervised) provide supervision of
all table games? (128)
Note: Your response to this question should be based on your
observations of the pit operations in general.
60. Is a table inventory (i.e., table tray‘s inventory) used exclusively
for the purposes of the issuance and receipt of chips, tokens,
and/or monetary equivalents, and for the purposes of handling
table game marker and rim credit issuances, wagering and
associated payout transactions? (129)
61. Is the table inventory not used to pay travel money to a patron,
provide dealer or cocktail waitress tips on behalf of a patron, or
for any other purpose unrelated to table game wagering and credit
activity? (Note for 129)
Promotional Payouts, Drawings and
Giveaway Programs
Note: MICS #‘s 130-132 apply to promotional payouts, drawings,
and giveaway programs in which the payouts are made from a bank
other than the table inventory, the payouts are related to table games
wagering activity, and the game play procedures are not affected.
Such payouts are not deductible when reporting table games revenue.
They do not apply to payouts from the table inventory resulting from
a wager made with a promotional coupon or chip. (Note before 130)
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62. Are the conditions for participating in promotional payouts,
including drawings and giveaway programs, prominently
displayed or available for patron review at the licensed location?
(130) Verify by examination.
Testing of promotional payout documentation is required, as
applicable. Select one promotional payout form per day for 2
days. Test days should be in non-consecutive months. Indicate
test dates selected and results of testing.
63. Are promotional payouts, including those as a result of drawings
and giveaway programs, that are greater than or equal to $500
documented at the time of the payout and does not impact
reported revenue to include the following:
a) Date and time? (131a)
b) Dollar amount of payout or description of personal property
(e.g., car)? (131b)
c) Reason for payout (e.g., promotion name)? (131c)
d) Signature of one employee verifying, authorizing and
completing the promotional payout with the patron? (131d)
e) Patron‘s name (for drawings only)? (131e)
Note: MICS #131 documentation may be prepared by an individual
who is not a table games department employee as long as the required
signature is that of the employee completing the payout with the
patron. (131)
64. If the promotional cash (or cash equivalents) payout, including
those as a result of drawings and giveaway programs, is less than
$500, is documentation created to support the bank accountability
from which the payout was made? (132)
Note: The required documentation could consist of a line item
on a cage or table games accountability document (e.g., ―43 $10
table games cash giveaway coupons = $430‖). (132)
Contests/Tournaments
Testing two contests/tournaments is required, as applicable.
Contests/tournaments should be in non-consecutive months.
Indicate contests/tournaments selected and results of testing.
65. Are all contest/tournament entry fees and prize payouts
(including mail transactions) summarized on an accountability
document on a daily basis? (139)
66. When contest/tournament entry fees and payouts are transacted,
are they recorded on a document which contains:
a) Patron‘s name? (140a)
b) Date of entry/payout? (140b)
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c) Dollar amount of entry fee/payout (both alpha and numeric,
or unalterable numeric) and/or nature and dollar value of any
noncash payout? (140c)
d) Signature of the individual completing the transaction
attesting to the receipt or disbursement of the entry
fee/payout with the patron? (140d)
e) Name of contest/tournament? (140e)
f) Are any entry fees accepted after the start of a tournament
(i.e., re-buys) documented in accordance with MICS #140,
except that the table number may be substituted for the
patron‘s name? (Note for 140)
67. Are the contest/tournament entry fees and payouts summarized
and posted to the accounting records on at least a monthly basis?
(141)
68. Are contest/tournament rules included on all entry
forms/brochures and prominently displayed or available for
patron review at the licensed location? (142) Verify by
examination.
69. Do the rules mentioned in the preceding question contain at least
the following:
a) All conditions that patrons must meet to qualify for entry
into, and advancement through, the contest/tournament?
(142a)
b) Specific information pertaining to any single
contest/tournament, including the dollar amount of money
placed into the prize pool? (142b)
c) The distribution of funds based on specific outcomes?
(142c)
d) The name of the organizations (or persons) registered
pursuant to NRS 463.169 that conducted the
contest/tournament on behalf of, or in conjunction with the
licensee, if applicable? (142d)
70. Are the results of each contest/tournament, including the name of
the event, date(s) of the event, total number of entries, dollar
amount of entry fees, total prize pool, and the dollar amount paid
for each winning category, recorded and available for patrons to
review? (143)
71. Is the name of each winner recorded and maintained, but not
made available to the participants unless authorized by
management personnel? (143)
72. For free tournaments (i.e., patron does not pay an entry fee), is
the information required by MICS #143, except for the number of
entries, dollar amount of entry fees and total prize pool,
recorded? (Note for 143)
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73. Are the contest/tournament records required by standards 139 –
143, which are addressed above, maintained for each event?
(144)
Computerized Player Tracking
Systems
Note 1: The standards within this heading only apply to
computerized player tracking systems that accumulate points that are
subsequently redeemed by the patron for cash, merchandise, etc.
They do not apply to player rating only systems (i.e., the evaluation of
a patron‘s play and the choice and/or dollar amount of
complimentaries provided to a patron are solely the result of an
employee‘s judgment). (Note before 133)
Note 2: The term ―point‖ or ―points‖ is a generic term and refers to a
representative of value awarded to a patron based upon specific
criterion established by the licensee. Commonly, points are earned by
patrons placing wagers or purchasing room, food, beverage or
entertainment admissions. Patron accounts in a player tracking
system are used to track points earned/awarded to patrons. (Note
before 133)
74. Is the addition/deletion of points to player tracking accounts other
than through an automated process related to actual game play
sufficiently documented, including a substantiation of the reasons
for increases, and are they authorized/performed by supervisory
personnel of the player tracking, promotions, or pit department?
(133) Verify by examination.
75. Is the supervisory authorization described in the preceding
question documented and randomly verified by accounting/audit
personnel on a quarterly basis? (133)
Note: The standard mentioned in the previous two questions does not
apply to the deletion of points related to inactive or closed accounts
through an automated process. (133)
76. Are employees who redeem points for members precluded from
having access to inactive or closed accounts without
authorization from supervisory personnel and is documentation
of such access and approval created and maintained? (134)
77. Is patron identification required when redeeming points without a
player tracking card? (135)
78. Are changes to the player tracking system parameters, such as
point structures and employee access, performed in one of the
following two methods:
a) Are they performed by supervisory employees independent
of the pit department? (136), or
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Questions Yes No N/A Comments, W/P Reference
b) Are they performed by pit supervisory employees if
sufficient documentation is generated and the propriety of
the changes are randomly verified by employees independent
of the pit department on a quarterly basis? (136)
79. Are all other changes to the player tracking system appropriately
documented? (137)
80. Are the rules and policies for player tracking accounts including
the awarding, redeeming and expiration of points prominently
displayed or available for patron review at the licensed location?
(138) Verify by examination.
Gaming Salons
81. Is a salon gaming report (independent from the report required by
MICS #145) produced at least monthly showing statistical drop,
statistical win, and statistical win to statistical drop hold
percentage by table and type of game and is it maintained by
shift, by day, cumulative month-to-date and cumulative year-to-
date? (123) Verify by examination.
82. Is the games performance data related to the gaming salon
reflected in both the table games reports for the casino as a whole
required by MICS #145 and in a separate salon gaming report as
described in the preceding question? (123) Verify by
examination.
83. Is a monthly gaming salon report maintained showing life-to-date
information on each primary and/or secondary patron wagering in
the gaming salon during the month who had a credit limit of
$500,000 or more? (124) Verify by examination.
84. Does the report mentioned in the preceding question include the
following by type of game, by patron and in total for the patron‘s
primary group:
estimated statistical drop and statistical win;
statistical win to statistical drop percentage;
total credit issuances;
total pit credit redemptions;
and total number of trips to date? (124a-e)
Note: The data for MICS #124a-d applicable to other secondary
patrons having no credit limit or a credit limit of less than
$500,000 may be identified as being attributable to the salon
patron‘s group (group to be identified by the primary patron‘s
name). (124)
85. On a monthly basis, are investigations of statistical fluctuations in
game results for the salon gaming area performed by
management independent of the pit department? (125)
86. Relating to the investigations mentioned in the preceding
question:
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Questions Yes No N/A Comments, W/P Reference
a) Do they include a subsequent examination of the
surveillance recordings, which can be performed by
surveillance department personnel, of the wagering activity
of those patrons whose wagering activity had a material
negative impact on the results of the salon gaming area for
the month? (125)
Note: Material negative impact is defined as an impact of 5
percentage points or 20% of all table games statistical win
to statistical drop percentage, whichever is smaller, for a
single patron. (125)
b) Are they initiated and is the follow-up completed no later
than 30 days after the generation of the monthly gaming
salon report? (126)
c) Is written documentation of the results of this review
maintained and does it include the names of all employees
interviewed, the dates of such interviews, the nature and
extent of the surveillance recording reviews performed, and
any recalculations performed in assessing the
reasonableness of the win percentage in light of the
information obtained? (126) Verify by examination.
Statistics
87. Is a table games statistical analysis report maintained that reflects
statistical drop, statistical win and statistical win to statistical
drop hold percentage by table and type of game for each shift, by
day, cumulative month-to date and cumulative year-to-date?
(145)
Note 1: Statistical drop equals drop per Regulation 1.095 plus pit
credit issues minus pit credit payments in cash in the pit.
Statistical win equals table games gross revenue per Regulation
6.110(1) plus marker credit slips. See MICS #160 for the
definition of the terms used in this standard. (145, Note 1)
Note 2: Promotional activity is not required to be tracked and
included in the report. Any promotional activity related to table
games wagering activity and game play procedures, if included in
the reports, must be disclosed separately on the reports. (145,
Note 2)
88. Is the table games statistical analysis report mentioned in the
preceding question presented to and reviewed by management
independent of the pit department prior to the submission of the
NGC-1 and NGC-31 for the month in which the activity
occurred? (146) Indicate management personnel independent
of the pit department performing the review.
89. At a minimum, does the review mentioned in the previous
question consist of the following:
a) An examination of the information for clerical errors?
(146a)
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b) A comparison of the statistical results with the base level
statistical performance? (146b)
Note: The base level is defined as either the statistical win
to statistical drop percentage for the most recent calendar or
fiscal year, or a rolling average statistical win to statistical
drop percentage for the immediately preceding 12 months. If
the gaming operation has been opened for less than 12 full
months, base levels for partial years should be used. (146b)
90. On a monthly basis, does the above referenced management
investigate all statistical fluctuations by game type from the base
level in excess of plus or minus 5%? (147)
91. Are the investigations mentioned above completed no later than
30 days after the generation of the month-end table games
statistical analysis report? (147)
92. Do the investigations include information from the pit
department, accounting department, surveillance department,
cage and credit department, and any other relevant department?
(147) And do they include an analysis of the following, as
applicable:
a) The drop, win and credit activity of patrons whose play
materially affected the results for the month, including the
amount of pit credit issued, amount of pit credit paid in cash
at the table, the amount of drop from the patron and the
resulting win/loss for the patron? (147a)
b) The effect of any changes to the rules, types of wagers or
game play procedures made to accommodate the wagering
activity of any patron? (147b)
c) The effect of any free play or promotional activity utilized
during the month? (147c)
d) The effect of any errors or mistakes made during the
operation of the game during the month? (147d)
e) The effect of any thefts or other improper acts by employees
or patrons of which pit supervisory personnel are aware?
(147e)
f) Any other unusual occurrences during the month being
reviewed? (147f)
93. Does the above referenced management compare the annual
business year end‘s statistical win to statistical drop hold
percentage for each game type to the comparable period‘s
industry average percentage available from the Board‘s
monthly ―Gaming Revenue Report‖? (148)
94. Does management investigate all statistical fluctuations by
game type in excess of plus or minus 5% and are the statistical
fluctuation investigations completed within three months after
the end of the business year? (148)
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Questions Yes No N/A Comments, W/P Reference
95. Are the results of the investigations required by MICS #146 -
#148 documented in writing and maintained? (149) Verify by
examination.
Table Games Accounting/Auditing
Procedures
Note: For all accounting/auditing standards, if they are
performed less frequently than required and/or the scope of the
work is less than required, state the frequency and/or scope of the
work that is performed. Additionally, if a MICS noncompliance
issue is noted, specify the frequency and/or the scope of the work
that is performed (i.e., if they perform a procedure, but not as
often as they should, state how often they do it instead of just
making a blanket statement that they don’t do it monthly,
quarterly, etc.).
Review of documentation evidencing the performance of table
games accounting/audit procedures is required. Select the
appropriate documentation to determine that all required
procedures are being performed.
96. Is the table games audit conducted by someone independent of
the table games operation? (150)
97. For computerized player tracking systems, does an
accounting/audit employee perform the following procedures at
least one day per quarter:
a) Review all point addition/deletion authorization
documentation, other than for point additions/deletions
through an automated process, for propriety? (151a)
b) Review exception reports including transfers between
accounts? (151b)
c) Review documentation related to access to inactive and
closed accounts? (151c)
Note: Compliance with ―a‖ through ―c‖ above is only required for
computerized player tracking systems that accumulate points that
are subsequently redeemed by the patron for cash, merchandise, etc.
They do not apply to player rating only systems. (151)
98. At least annually, are the following procedures performed for
computerized table games player tracking systems (in-house
developed and vendor systems):
a) Are the systems reviewed by personnel independent of the
individuals that set up or make changes to the system
parameters to determine that the configuration parameters
are accurate and that the configuration parameters have not
been altered without appropriate management
authorization (e.g., verify the accuracy of the awarding of
points based on the dollar amount wagered)? (152)
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Questions Yes No N/A Comments, W/P Reference
b) If possible, is the system tested to further verify the
accuracy of the configuration parameters (e.g., to simulate
activity to verify the accuracy of the amount of points
awarded)? (152)
c) Are the test results documented and maintained? (152)
Note: Compliance with ―a‖ through ―c‖ above is only required for
computerized player tracking systems that accumulate points that
are subsequently redeemed by the patron for cash, merchandise, etc.
They do not apply to player rating only systems. (152)
99. For currency counter interface systems, for each drop do
accounting/audit employees compare the totals on the currency
counter report to the system-generated currency count, as
recorded in the master game summary with discrepancies being
resolved prior to the generation/distribution of the master
games summary and the table games statistical analysis
reports? (153)
100. Do accounting/audit personnel perform the following
procedures for fill/credit slips and marker credit slips:
a) For manual fill/credit slips and manual marker credit slips,
for at least one day each month are the original slips (those
placed in the table game drop box) reconciled to the
restricted copy to verify that the dollar amount of the
transaction is the same on both parts of the slip? (154a)
b) For manual fill/credit slips and manual marker credit slips,
for at least one day each month, are the numbered slips
numerically accounted for with an investigation being
performed and documented for all slips that are missing?
(154b)
c) At least one day each month, are the original slips (those
placed in the table game drop box) footed and traced to the
total fill/credit and marker credit amounts indicated on the
master games summary prepared by the count team and is
an investigation performed and documented to determine
whether all forms are accounted for if any variances are
noted? (154c)
d) For each day, is a sample of slips examined for propriety
of signatures and proper completion? (154d)
101. Do accounting/audit personnel perform the following
procedures for marker issue/payment slips:
a) For manual marker issue slips, at least one day each
month, are all numbered slips numerically accounted for
with an investigation being performed and documented for
all slips that are missing? (155a)
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b) At least one day each month, are the marker issue and
payment slips (those placed in the table game drop box)
footed and traced to the total marker issue and payment
amounts indicated on the master games summary prepared
by the count team and is an investigation performed and
documented to determine whether all forms are accounted
for if any variances are noted? (155b)
c) For each day, is a sample of marker issue and payment
slips examined for propriety of signatures and proper
completion? (155c)
d) If the count team members only totaled the marker issue
and payment slips and traced to the totals documented by
the computer system (see MICS #100b), for each day,
verify that the issue and payment slips for each table are
accurate? (155d)
102. For each day, do accounting/audit personnel reconcile the total
dollar amount of markers transferred indicated on the mass
marker transfer form(s) and marker credit slips to the dollar
amount recorded on the cage accountability documentation and
is the mass marker transfer form reviewed for propriety of
signatures and proper completion? (156)
103. Do accounting/audit personnel perform the following
procedures for voided markers and voided fill/credit slips for
each day after the soft count process:
a) Are all voided forms examined for proper authorization
and a ―void‖ designation? (157a)
b) For computer fill/credit and marker systems, are all voided
forms traced to the computer system report(s) reflecting
void activity? (157b)
c) For computer fill/credit and marker systems, is the
computer system report(s) reflecting void activity
examined for void transactions that are not supported by a
voided form? (157c)
d) Determine that all parts of the voided form have been
received? (157d)
e) Are the forms examined for the proper number of
signatures? (157e)
f) For all voided markers, determine that the void of the pit
marker was not performed by cage personnel and is the
time of marker issuance compared to the time of voiding to
determine that transactions were voided within 30 minutes
after the issuance of the marker and, if not, determine
whether the documented reason for exceeding this time
period is adequate? (157f)
Note: Employees of the accounting/audit department who are soft
count team members may perform the procedures required by MICS
#157. (157)
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Questions Yes No N/A Comments, W/P Reference
104. Do accounting personnel perform the following procedures for
rim cards each day:
a) Verify that numerically numbered rim cards are accounted
for with investigations being performed and documented
for all forms that are missing? (158a)
b) Is a sample of rim cards examined for propriety of
signatures and proper completion? (158b)
c) Are balance increases/decreases of rim credit footed to
ensure the clerical accuracy of the outstanding rim credit
balance? (158c)
d) For rim cards in which the outstanding rim credit balance
has been reduced to zero by a transaction other than a
transfer to another table or shift, is the fact that the rim
credit was reduced by the issuance of a marker or paid in
full by the patron within seven days from the last date of
recorded patron rim credit activity verified by reviewing
the patron‘s rim card(s) for the last date of the prior
increase/decrease to the rim credit balance and comparing
it to the final date the rim credit balance was reduced to
zero? (158d)
e) Determine if any issued markers used to settle the rim
credit were subsequently voided and rim credit was
improperly reopened? (158e)
f) Is the rim credit repaid with chips indicated on the patron‘s
rim card footed and traced to the total daily amount
indicated on the pit daily report (prepared pursuant to
MICS #48) for rim credit repaid with chips? (158f)
g) For transfers of rim credit balances to another table or
shift, verify that the amount transferred traces from one
table‘s/shift‘s rim card to the other table‘s/shift‘s rim card?
(158g)
105. Are the following procedures performed by accounting/audit
personnel each day using the master games summary prepared
by the count team members:
a) Is the dollar amount of currency drop proceeds on the
master games summary reconciled to the dollar amount
recorded in the applicable accountability document using,
if applicable, the transfer forms indicating all transfers
in/out of the currency count room, both during and at the
end of the count and are any variances investigated and
documented? (159a)
b) Is win/loss in total and by shift recalculated? (159b)
Note: For those systems which electronically perform this
function, accounting personnel will recalculate win/loss in
total and by shift for one day each month, rather than
daily. (159b)
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Questions Yes No N/A Comments, W/P Reference
c) Verify that the correct total win/loss on the master games
summary is recorded in the accounting records used to
prepare the NGC tax returns? (159c)
d) Is the summary examined for propriety of signatures?
(159d)
Testing is required for Question 106, as applicable. Select the
most recent month-to-date table games recap report. Indicate
the month-to-date table games recap report selected.
106. Is a daily table games recap report prepared for the day and
month-to-date, by game, which includes the following
information used to prepare the NGC tax returns:
a) Pit credit issues, which for NGC-31 reporting purposes
includes markers issued in exchange for chips, markers
issued to decrease the rim credit balance or as a result of
call bets, rim credit repaid by a patron in the pit with chips,
credit slips for personal and payroll checks, and customer
deposit withdrawals against front money (CDW‘s)?
(160a1-5)
Note: Pit credit issues do not include replacement markers
issued as a result of a partial payment of a marker or a
consolidation of markers into one new marker. (160a)
b) Pit credit payments by a patron in chips in the pit, which
also includes rim credit repaid in the pit by a patron with
chips and chip payments made to re-establish front money
(CDW redemptions) in the pit by a patron? (160b)
c) Pit credit payments in cash in the pit, which does not
include rim credit repaid in the pit with cash? (160c)
d) Drop per Regulation 1.095? (160d)
e) Statistical win, which is equal to table games gross
revenue per Regulation 6.110(1) plus marker credits?
(160e)
Note: ―Marker credits‖ is the amount of outstanding
markers and CDW‘s transferred from the pit to the cage.
(160e)
f) Gross revenue per Regulation 6.110(1)? (160f)
107. For tables with table game drop boxes that allow for the
automated recording of cash inserted into the drop box (e.g.,
contains a drop meter), are the following procedures
performed:
a) For each day, do accounting/audit personnel compare, by
shift, the total computed per the automated recordings to
the total amount of cash counted by the soft count team?
(161)
b) Is follow-up performed for each table having an
unresolved variance in excess of $200 between actual cash
and the automated readings? (161)
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c) Are the follow-up and results of any investigations
documented and maintained? (161)
d) Are discrepancies resolved prior to the
generation/distribution of the month-end daily table games
recap report? (161)
108. Do accounting/audit employees review exception reports for all
computerized table games systems (e.g., fill/credit and marker
systems) at least monthly for propriety of transactions and
unusual occurrences including, but not limited to, void
authorizations, with all such improper transactions or unusual
occurrences being investigated with the investigation results
being documented? (162)
Note: An exception report is defined as a report produced by
the computerized system identifying unusual occurrences,
changes to system configuration parameters, alteration to
initially recorded data, voids, etc. (162)
109. For all contests, tournaments, promotional payouts, drawings,
and giveaway programs, including promotional payouts
resulting from player tracking activity, is the following
documentation maintained:
a) Copies of the information provided to the patrons
describing the contests, tournaments, promotional payouts,
drawings, and giveaway programs (e.g., brochures, fliers)?
(163a)
b) Effective dates? (163b)
c) Accounting treatment, including general ledger accounts,
if applicable? (163c)
d) For tournaments and contests, the name of the
organizations (or persons) registered pursuant to NRS
463.169 that conducted the contest/tournament on behalf
of, or in conjunction with, the licensee, if any? (163d)
e) The extent of responsibilities (including MICS compliance
responsibilities) each organization and the licensee had in
the contest/tournament (e.g., ABC nonprofit is to receive
100% of entry fees and provide noncash prizes for the
winners with the licensee collecting entry fees, dealing the
tournament and distributing the prizes to winners)? (163d)
110. Monthly, do accounting/audit personnel review all contests,
tournaments, promotional payouts, drawings, and giveaway
programs to determine proper accounting treatment and proper
table games gross revenue win/loss computation? (164)
Note: For purposes of this standard, licensees are required to
review any contests, tournaments, promotional payouts,
drawings and giveaway programs that occurred any time
during the last month, not just any such events that occurred at
the time of their review.
171
Questions Yes No N/A Comments, W/P Reference
111. Do accounting/audit personnel perform procedures (must
include a review of documents along with employee interviews
and/or observations) monthly to ensure that promotional
payouts, drawings and giveaway programs are conducted in
accordance with the conditions provided to the patrons. (165)
Note: For purposes of this standard, licensees are required to
examine any promotional payouts, drawings and giveaway
programs that occurred any time during the last month, not just
any such events that occurred at the time of their examination.
112. Do accounting/audit personnel reconcile all contest/tournament
entry and payout forms to the dollar amounts recorded in the
appropriate accountability document daily? (166)
113. When payment is made to the winners of a contest/tournament,
do accounting/audit personnel reconcile the contest/tournament
entry fees collected to the actual contest/tournament payouts
made? (167)
Note 1: This reconciliation is to determine whether, based on
the entry fees collected, the payouts made and the amounts
withheld by the gaming establishment, if applicable, were
distributed in accordance with the contest/tournament rules.
(167)
Note 2: This procedure is not required to be performed at the
time the payments are made to the winners. It can be done at
some point thereafter, but must be done at least monthly.
114. Monthly, do accounting/audit personnel reconcile gross
revenue from the general ledger and the month-end daily table
games recap to the monthly NGC tax returns by game? (168)
115. Is the reconciliation mentioned in the preceding question
documented and maintained with all variances, including the
variance caused by the reduction of table games revenue on the
NGC tax return due to an allowable tax deduction supported by
inter-casino linked system reports, being reviewed,
documented and maintained? (168) For one month review
the reconciliation to verify the proper completion of the
reconciliation and to determine that the variance amount is
accurate. Indicate the month/year reviewed and the results
of the review.
116. For computerized key security systems controlling access to
table games drop and count keys, do accounting/audit
personnel, independent of the system administrator, perform
the following procedures:
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Questions Yes No N/A Comments, W/P Reference
a) Daily, is the report generated by the computerized key
security system indicating the transactions performed by
the individual(s) that adds, deletes, and changes user‘s
access within the system (i.e., the system administrator)
reviewed to determine whether the transactions completed
by the system administrator provide an adequate control
over the access to the table games drop and count keys and
whether any drop and count key(s) removed or returned to
the key cabinet by the system administrator were properly
authorized? (169a)
b) For at least one day each month, is the report generated by
the computerized key security system indicating all
transactions performed reviewed to determine whether any
unusual table games drop and count key removals or key
returns occurred? (169b)
c) At least quarterly, is a sample of users that are assigned
access to the table games drop and count keys reviewed to
determine that their access to the assigned keys is adequate
relative to their job position? (169c)
d) Are all improper transactions or unusual occurrences noted
through the performance of the standards in (a) through (c)
above investigated with the results documented? (169d)
117. Quarterly, is an inventory of all count room, table game drop
box release, storage rack and contents keys performed and
reconciled to records of keys made, issued, and destroyed and
are investigations performed for all keys unaccounted for with
the investigations being documented? (170)
118. Is documentation (e.g., log, checklist, notation on reports, and
tapes attached to original documents) maintained evidencing
the performance of table games audit procedures, the
exceptions noted and follow-up of all table games audit
exceptions? (171) Verify by examination.
119. Complete the CPA MICS Compliance Checklist for Table
Games Marker Credit Play, if applicable.
120. Complete the CPA MICS Compliance Checklist for
Information Technology – MICS #1 - #28
Written System of Internal Control
121. Has the licensee‘s written system of internal control for table
games been re-read prior to responding to the following
question?
122. Does the written system of internal control for table games
reflect the actual control procedures in effect for compliance
with the MICS, variations from the minimum internal control
standards approved pursuant to Regulation 6.090(8), and
Regulation 14 associated equipment approvals? [Regulation
6.090(13)]
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On April 28, 2005, Wynn Casino Opened For Business: Employment Policies, Job
Titles and Job Descriptions Were in Keeping With Nevada Gaming Industry
Standards
Prior to September 1, 2006, table games dealers at Wynn Casino, reported to
―table games supervisors,‖ that is, floor supervisors, who, in turn, reported to pit
managers, who, in turn, reported to assistant shift managers, who, in turn, reported to
shift managers, who, in turn, reported to operations directors, who, in turn, reported to a
vice president of table games.
Rather than each dealer retaining any tips received during a shift, all dealer tips
are pooled and divided equally among all table games dealers depending upon the
number of hours worked during a pay period. On September 1, 2006, Respondent
employed 588 dealers.
According to the job description, Respondent‘s floor supervisors, who were
responsible for from two to six tables in a pit area, were responsible for issuing credit
markers to guests, settling minor disputes involving mistakes on a table game,
documenting the required information for complimentary ―comps,‖ protecting Wynn
Casino‘s assets from cheating or scams, and ―. . . continually monitor[ing] and direct[ing]
dealers to maintain conformity of established policies and procedures.‖ Prior to
September 1, 2006, Wynn Casino employed approximately 200 floor supervisors.
The following are excerpts from Wynn Casino‘s Employee Handbook regarding
the Table Games Department; including relevant job descriptions and duties for the pit
manager, floor supervisor and box supervisor. The duties and responsibilities assigned to
the pit managers, floor supervisors and box supervisors are in keeping with the
established Nevada gaming industry standards.
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Wynn Casino Employee Handbook: Table Games Department
Before “the Change” September 1, 2006
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Wynn Casino Policy Regarding Tokes
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September 1, 2006: Wynn Casino Unlawfully Expands the Dealer Tip Pool to
Include “CSTL’s” and Box Supervisors
Since its public opening in April 2005, Wynn Casino, has operated as an opulent
hotel, casino, and resort complex in Las Vegas, Nevada and, for the quality of its service
to its guests and customers, has received such awards as five diamonds from the
American Automobile Association.
Steven A. Wynn, for whom Respondent‘s facility is named, is the chairman of the
board of directors of Wynn Resorts; Andrew Pascal is the president of Wynn Casino; and
William Westbrook, Jr. is its director of casino operations.
The genesis of this dispute, was Wynn Casino‘s decision, to unlawfully revamp
the casino‘s existing management structure by creating a ―new‖ position, casino service
team lead, (hereafter ―CSTL‖), and permitting these CSTL‘s to share in the dealers‘ tip
pool.
In order to accomplish this, according to Wynn Casino they combined the
positions of floor supervisor and pit manager, to create the position of CSTL.
With regard to the latter position, Wynn Casino management claims the CSTL‘s,
work ―side by side‖ with the dealers, in providing the guests‘ overall experience in the
casino, including making the team leads responsible for welcoming players, ―the
cleanliness of the environment,‖ and cocktail service, while, at the same time,
maintaining the other ―typical‖ responsibilities of the floor supervisor position.
According to the job description CSTL‘s are assigned to a ―dealing team,‖ and the
CSTL and his dealers ―. . . must strive [to] develop excellent long-term relationships with
new and existing guests through the delivery of flawless guest services.‖ In addition, the
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CSTL remained responsible for ensuring that ―… proper procedures are followed by
dealers in games within unit‖ and protecting the ―integrity‖ of the games.
Wynn Casino president Pascal testified that they believed it necessary to include
the 200 team leads in the dealers‘ tip pool for two reasons. While the team leads and the
dealers both would be ―in the line of service‖ to the casino guests, a significant pay
disparity existed between the floor supervisor position and that of dealer, with the former
being paid at $60,000 per year and the dealers earning approximately $100,000 per year
in combined wages and tips.
Unlike dealers, the CSTL‘s did not receive a full share of tips. Rather, each
CSTL was given a 40 percent of a share, as his or her share of the tips pool.
In addition to the CSTL‘s, Wynn Casino also gratuitously gave individuals in the
box supervisor position, a share in the dealers tip pool, at a rate of 20 percent of a share.
Relevant sections of the Wynn Casino Employee Handbook for the Table Games
Department are presented below.
186
Wynn Casino Employee Handbook: Table Games Department
After “the Change” September 1, 2006
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188
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192
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The Real Reason for Wynn Casino’s Unlawful Expansion of the Dealers’ Tip Pool:
“Money”
Over the last five decades, a vast amount of academic as well as policy-support
research has been conducted on integrity, transparency and accountability – and
conversely – corruption in the casino industry.
The issue of ethical conduct of casino management has received a great deal of
focus from international, regional and national organizations, interested in promoting the
performance of the casino industry. A consensus has developed world-wide over the
importance of reforming casinos to strengthen integrity, transparency and accountability
and to prevent and combat corruption.
Such reforms are crucial to protecting the gaming public, enhancing casino
industry performance, and enhancing Nevada‘s role in orchestrating the continued
development of gaming industry within the state.
A serious challenge faces Nevada‘s gaming regulatory bodies, in administering to
the needs of casino licencees‘ striving for financial development and growth in today‘s
ultra competitive casino gaming industry. With the advent of legalization of gaming
throughout the United States, casino operators are faced with the obstacle of having to
share the gaming public, with new and developing markets.
Overcoming such obstacles has required major reforms in casino management to
enhance its efficiency and effectiveness. It requires better governance that is more
respectful of the ―big‖ financial picture.
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It is within this context, Wynn Casino management ―undertook to transform the
entire gaming sector‖ by adopting a scheme which allowed management to reduce its
costs by unlawfully accessing the dealers‘ tips.
With regards to the specific motivation behind Wynn Casino‘s radical policy
change, Andrew Pascal, testified that ―a significant pay disparity existed that had to be
reconciled.‖ The two positions involved were floor supervisor position and that of dealer,
with the former being paid at $60,000 per year and the dealers earning approximately
$100,000 per year in combined wages and tips. A widening disparity between the wages
earned by dealers and casino floor supervisors caused the casino to alter the structure of
its table games division, Pascal said.
Pascal said in sum and substance, that Wynn Las Vegas dealers were the highest
paid dealers in the city, averaging about $100,000 per year in salary and tip earnings. But
the employees supervising dealers average about $60,000 a year in salary. ―Because of
our property, that disparity has gotten wider,‖ Pascal said, citing Wynn's emphasis on
high-end play as one reason its dealers' tokes are larger than most Strip properties.
There was no incentive in the division to advance and grow. Everybody wanted to
become dealers, he added. Dealers who split tips by shifts now will share those tokes
with team leaders and supervisors, who temporarily received a boost in base salary.
Unlike dealers, the team leads did not receive a full share of tips. Rather, each
team lead was given a 40 percent of a share as his or her share of the tips pool. In
addition to the team leads, Wynn Casino also gave individuals in the box person title, the
employees, who are responsible for supervising, and controlling the money at the craps
tables, a share in the tips pool at a rate of 20 percent of a share.
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Like many employers before, Wynn Casino is unlawfully seeking to divert tips
given to its‘ employees, under the guise of a ―valid tip pool.‖
Wynn Casino would have the law interpreted so as to permit an employer to use
employees tips as an alternative source of income, although in fact this is strictly
prohibited by Nevada law.
In the case at bar, the rationale of Wynn Casino management conflicts with the
language of the statute, case law and Nevada‘s legislative intent.
Under Nevada law, however, from the moment it is issued, a tip is the property of
the employee or employees (in the case of a tip pool) who receive them. The federal court
has held that ―forced tip sharing does not violate Nevada law, so long as the employer
does not retain any part of the tips for his own use or reap any direct benefit from the
pooling.‖ Cotter v. Desert Palace, Inc., 402 F.Supp. 157 (1989).
But in fact, Nevada case law is even more restrictive, permitting employers to
―reap only collateral benefits‖ from the implementation or expansion of a valid employee
tip pool. Alford v. Harolds Club, 99 Nev. 670, 669 P.2d 721(1983).
By implementing these unauthorized radical changes, Wynn Casino has
unlawfully shifted its financial burden, of paying their ―table games supervisors‖
(CSTL‘s), to its dealers, by unlawfully accessing the dealers tip pool. Furthermore,
through the misclassification of these employees, Wynn Casino is reaping an unfair
competitive advantage over law-abiding casinos, which are in compliance with Nevada‘s
gaming industry standards.
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Wynn Casino President Admits to Violating Nevada Law:
Seeking a Direct Benefit is an Unlawful Purpose For Tip Pool Expansion
Wynn Casino President, Andrew Pascal, has admitted that the expansion of the
dealers‘ tip pool was undertaken for the sole purpose of benefiting Wynn Casino.
A casino‘s expansion of a dealer‘s tip pool is unlawful where the casino ―reaps
any direct benefit from the pooling.‖ Alford v. Harolds Club, 99 Nev. 670, 669 P.2d 721
(1983).
In adopting the court‘s rationale regarding tip pooling in Moen, the Nevada
Supreme Court held that an ―…employer shall not (1) retain any part of the tips for its
own use; or (2) reap any direct benefit from the pooling. Alford, Id.
The court strongly emphasized the importance that ―Harolds Club, only reaped
collateral benefits of higher employee morale and lower employee turnovers‖ and that
―the change brought Harolds Club, into conformity with general gaming industry practice
throughout the state.‖ In Cotter, the court held that ―Caesar's Palace was acting under
color of state law instituting the new policy as it because it relied on Nevada precedent
that required dealers to share with other dealers.‖
The court noted, ―Forced tip-sharing does not violate Nevada law or policy so
long as the employer does not “reap any direct benefit from the pooling and provided
that the new procedure does not violate Nevada law or policy.
During his testimony before the Labor Commissioner, and in a letter dated August
21, 2006 (reprinted above), Andrew Pascal admitted that Wynn Casino sought to achieve
a ―direct benefit‖ from the expansion of the dealers‘ tip pool. The ―direct benefit‖ is
presented below in his own words which are highlighted for emphasis:
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“Over the years, the casino industry has allowed an anomaly to occur with
regard to the compensation earned by dealers and Floor Supervisors. As a result
of tip income, it has become common for Floor Supervisors to earn less money
than the dealers they supervise. This results in an inverted system whereby the
best dealers do not to be promoted, as should be the case in any employment
situation.
We have therefore decided to modify our Tab Games Department and tip
pooling procedures to rectify this discrepancy.
First, we are combining the positions of Floor Supervisor and Pit Manager to
create the position of Casino Service Team Lead. Each Casino Service Team
Lead “will manage” a small pit area; the size of the pit area will depend on the
game and the location in the casino. This will allow for a true team environment
with the Casino Service Team Lead as the team leader.”
Andrew Pascal, President, Wynn Casino, August 21, 2006
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Memorandum From Wynn Casino President Andrew Pascal, August 21, 2006
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Wynn Casino: “CSTL’s Are Not Supervisors, They Are a Combination of Floor
Supervisors and Pit Managers” With Additional Customer Service Responsibilities
The words of Andrew Pascal on behalf of Wynn Casino provide great insight into
the matter currently before the Labor Commissioner, for it is language that has defined
the evolution of mankind.
In the aforementioned memorandum of August 21, 2006, Andrew Pascal stated
that Wynn Casino is ―…combining the positions of Floor Supervisor and Pit Manager to
create the position of Casino Service Team Lead.‖
It is significant that Andrew Pascal chose to use the word ―combine,‖ rather than
―eliminate.‖
The definition of ―combine‖ is to bring into a state of unity; to merge; to join two
or more and make into one.
The definition of ―eliminate‖ is to get rid of; to remove; to extinguish: to
terminate, to end, or take out.
In the words of the Wynn Casino President, the positions of Floor Supervisor and
Pit Manager have been ―combined to create the position of Casino Service Team Lead.‖
Furthermore, the Wynn Casino President has stated that, ―Each Casino Service
Team Lead “will manage” a small pit area...”
Without belaboring the point, the statements and testimony of Wynn Casino
President, Andrew Pascal, have demonstrated that:
(1) a CSTL is merely a combination of a Floor Supervisor and Pit Manager, with
some additional customer service responsibilities; and
(2) CSTL‘s ―manage a small pit area and ―provide a level of oversight.‖
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As a matter of public record, the Minutes from the Meeting of the Assembly
Committee on Judiciary – 74th
Session - March 27, 2007, provide additional insight in the
case at bar (highlights added for purposes of illustration):
Assemblyman Ohrenschall:
“My understanding is that the traditional, historical role of the floor person
is to be impartial to protect the integrity of the game. If the floor person
shares in the tokes would it compromise that impartiality in any way?
Andrew Pascal:
No. That is no longer the only means of really evaluating what is happening at the
point of the game. Today's surveillance is far more robust than in the past. We
also have a dedicated team of people that procedurally evaluate what happens on
the floor. They do skill checks on specific players that we might have some
concerns about. Team leads are not the primary means of protecting the
integrity of the games. We have several other people and systems in place to
ensure integrity.
Assemblyman Ohrenschall:
Are dealers allowed to solicit a toke? If so what does the floor man do if he
observes a dealer soliciting a toke?
Andrew Pascal:
They are not to solicit a toke. The tokes exist as a guest's expression of their
appreciation of service. If tips were solicited, the dealer would be addressed
and counseled.
Assemblyman Horne:
My original question seems to have been answered. I agree with the attempt to
provide equity among the employees who you believe are in the line of service to
your customers. What you refer to as "team leads," previously referred to as
floor supervisors or pit bosses, are they no longer supervising? Do they just
have additional duties which include a supervisory role?
Andrew Pascal:
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They still provide a level of oversight on games, but a much greater part of their
role is now in serving guests. In restructuring and redefining their role, it was not
just a matter of giving them a new title and then placing them in the tip pool. We
have redefined the job. We retrained everybody on how to perform that job. All
forms of supervisors were put through interviews for the new positions. The
interviewees had to qualify by satisfying the new standards in what we were
emphasizing as part of their job. A number of them did not receive the
promotional opportunities into the Team Lead position.
We had a number of dealers who expressed interest in becoming Team Leads as
well. They also had to qualify to be extended the opportunity of being promoted
into the new position. The composition of the people that are in this position is
very different. They provide some level of oversight, but I emphasize that there
is now a much greater focus on managing the experience of our guests.‖ (From
The Minutes of the Meeting of the Assembly Committee on Judiciary – 74th
Session - March 27, 2007, Id.).
Consistent with the testimony of the dealers‘ at the hearing before the Labor
Commissioner, it is the responsibility of the supervisors of the dealers, the CSTL‘s to
―address and counsel,‖ or in other words, ―discipline‖ the offending dealer.
With respect to the State of Nevada‘s concerns for assurance ―integrity of the
table games,‖ it is clearly a conflict of interest for a ―table games supervisor‖, charged
with the duty of assuring ―game integrity,‖ to oversee table games in which they have a
financial interest in the tips and gratuities generated by those games. The aforementioned
scenario is precisely the situation that the Nevada Legislature has painstakingly sought to
avoid over the past seventy nine years of gaming regulation in the State.
As it has been demonstrated, Wynn Casino‘s CSTL‘s are in fact ―table games
supervisors.‖ Regardless of how many additional duties are assigned to a supervisor by
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his employer, a supervisor is still – a supervisor. ―Table games supervisors‖ have always
had customer service duties and responsibilities. As previously stated, the additional
customer service responsibilities heaped on ―table games supervisors‖ have been
prompted by evolutionary changes in the gaming industry.
That is why most Nevada casinos have changed the focus of the ―table games
supervisor,‖ to have them assist in making the players experience as pleasant as possible,
so as to insure that a player plays as long as possible and returns to the tables as often as
possible. Throughout the gaming industry, there has been a conscious effort on the part of
casino management to make the job description of a ―table games supervisor,‖ more
conducive to the needs of the player.
A CSTL is not a new ―cutting edge‖ idea; in truth, a CSTL is just a pit supervisor
working under a different name. A CSTL is what musicians would call ―a variation on a
theme.‖
According to Wynn Casino, CSTL stands for Customer Service Team Lead. What
―teams‖ were the CSTL‘s leading? The credible testimony offered at the hearing before
the Labor Commissioner, demonstrated that virtually none of the affected employees, the
CSTL‘s or the dealers, were ever assigned to, or knew what ―team‖ to which they were
assigned.
Often in employment world, employees find that their ―job description‖ doesn‘t
fit the job. In this case, the change in job description is a ―sham.‖ It is part of a ruse by
Wynn Casino, to gain access to the much coveted ―dealers tip pool.‖ It is in fact, as stated
at the outset, a shameless ―money grab‖ against hard working American men and women.
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FACT: No Court in the History of the United States Has Ever Authorized an
Expansion of a “Dealer’s Tip Pool” to Include Anyone Other Than Dealers
As previously referenced, the three leading cases on the subject are: Moen v. Las
Vegas Intern. Hotel, Inc.; Alford v. Harolds Club; and Cotter v. Desert Palace, Inc.
The legal definition of ―orbiter dicta‖ is: ―an observation made in passing by a
judge, on some point of law not directly in issue in the case before him and thus neither
requiring his decision, nor serving as a precedent‖.
In 1975 the Court in Moen, in ―orbiter dicta,‖ recognized floormen and boxmen,
to be in the ―same line of service,‖ as the dealers.
“There is no reason to suppose that the last person in a service line is the only
one entitled to share in the customer's bounty. For example, a busboy as well as a
waitress contributes to the good service and well-being of a customer in a
restaurant. Similarly, in a casino, the floormen, boxmen and cashiers all
contribute to the service rendered to the player. Plaintiff's argument, which has to
be predicated upon the contention that the tip handed to him becomes his
personal property under NRS Sec. 608.160, is ridiculous as applied to a craps
table, for example, which normally is manned by three employees, two dealers
(one of whom is a stickman) and a boxman, all of whom are active in the play of
the game and the placement and paying of bets. It is ridiculous to assume that a
satisfied player who hands over a tip intends it only for the particular person to
whom the tip is given.”
The evident purpose and proper interpretation of the statute is that it was enacted
to prevent the taking of tips by an employer for the benefit of the employer.”
This view was adopted by the Court in Alford Id, which stated:
“Although this court is not bound by a federal district court's interpretation of a
Nevada statute, we believe that the interpretation advanced in Moen is, in light of
the legislative history and well established and commonly known Nevada
210
employment practices, the correct one. Accordingly, the district court did not err
when it found that NRS 608.160 did not prohibit Harolds Club from imposing a
tip-pooling policy in the instant case.”
Neither the Court in Moen or Alford, however, ever expressly or impliedly
authorized expansion of a dealer‘s tip pool, to include anyone but dealers.
With respect to the possibility of supervisory personnel participating in a
―dealer‘s tip pool,‖ the Court in Cotter noted:
“On March 1, 1988, IRS agents entered Caesar's and executed levies upon two
dice dealers. That afternoon, Caesar's issued an interdepartmental memorandum
changing its tip-distribution policy. Under the new policy, dealers from all shifts
are required to group all tips for a twenty-four hour period, and then to divide the
total evenly, without regard to the contributions of particular crews.In order to
implement the new policy, Caesar's directed the formation of a “toke committee.”
On March 20, the dealers elected four representatives to sit on the committee. The
dealers also voted to share tokes with sick and vacationing dealers, and to
establish a Medical Assistance Plan for dealers with long-term illnesses.
On April 11, the toke committee informed management that it had decided on a
policy of sharing tips with boxmen-supervisory workers who occasionally fill in
for dealers. Caesar's promptly rejected the proposal.”
The reason Caesar‘s management rejected the proposal was the same then as it is
today. Boxmen, or box supervisors, are in fact ―table games supervisors.‖ As ―table
games supervisors,‖ boxmen, are not authorized to receive tips. This is the Nevada
gaming industry standard. To do so, would compromise the integrity of the table games
to which they are assigned.
The Supreme Court of Nevada previously settled the issue of expansion of a
dealers tip pool. In Alford, the Court found that a dealers tip pool can only be expanded
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to include dealers, inasmuch as the introduction of anyone other than a dealer, to a
dealers‘ tip pool, would “…not comply with the requirement of conformance with
commonly known Nevada employment practices.” Alford. Id.
In the case at bar, pursuant to Nevada case law, expansion of the dealers tip pool
is limited to the extent that other dealers are not represented in the tip pool, for example
poker dealers.
Both Alford, (which adopted the Courts‘ finding in Moen), and Cotter employed
―the line of service‖ rationale in limiting their expansion of the dealers tip pools, to
include ―dealers only.‖ In Cotter, the Court held that ―Caesar's Palace was acting under
color of state law instituting the new policy as it because it relied on a Nevada precedent,
which required dealers to share with other dealers.‖
Significantly, the courts in both Moen and Alford, recognized that while an
individual employee may perform a service that contributes to a patrons overall
experience, that results in a tip, it does not mean that employee is entitled to share in the
particular tip pool in which the tip was received.
In a casino, there are many ―lines of service‖ which may or may not lead to
inclusion in a particular tip pool. Casino dealers are not in the same line of service as
valet parking; who are not in the same line of service as doormen, spa workers, restaurant
workers, housekeeping, security, concierge services, hotel shuttle services, etc.
While each of these individuals may at times contribute to a favorable view of the
patrons overall experience, which results in a tip, they are not entitled to share in that tip,
unless they stand in the same line of service.
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Nevada Law Prohibits All “Table Games Supervisors” From Accepting Tips or
Sharing in the “Dealers” Tip Pool
In the State of Nevada, on a casino floor, anyone can find themselves the recipient
of a tip – except these ―table games supervisors.‖
Nevada‘s regulatory concerns for ensuring ―integrity of the game‖ on the casino
floor, acts a bar to casino ―table games supervisors‖ receiving tips.
―Table games supervisors,‖ specifically, floor supervisors, pit supervisors, box
supervisors, CSTL‘s or whatever you want to call them, are not authorized to receive tips
in the State of Nevada. This is the Nevada gaming industry standard. To do so, would
compromise the integrity of the table games to which these supervisors are assigned.
At various times during a shift, ―table games supervisors‖ are called upon to make
decisions, which affect the disposition of a wager. To allow any of these ―decision
makers‖ to accept a tip, would strike at the very heart of the ―integrity of the game.‖
Any decision made by any of the these supervisors, with respect to any table
game, that affects a player to the detriment of another, could be interpreted as being the
result of ―tip related‖ favoritism.
Moreover, the radical notion of allowing ―table games supervisors,‖ to share in
the dealers tip pool, would return Nevada gaming back to the days of ―tip hustling‖ by
dealers. Expressions like ―rip and tear‖ and ―green light‖ which referred to extreme forms
of ―tip hustling‖ would soon re-emerge.
In the eyes of the Nevada‘s Gaming Board, no earthly good can come from such a
radical departure from the Legislature‘s record of conservatism, because the strength of
Nevada‘s gaming system depends on its reliability and predictability.
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The integrity of every aspect of Nevada‘s gaming industry is the result of decades
of effort, and regulators are committed to insuring that its integrity is not sacrificed by
radical changes to its regulatory framework‖.
Nevada‘s gaming industry standard is no different than the rules that pertain to
other competitions.
In professional athletics, basketball, football, hockey and soccer referees, baseball
and tennis umpires are prohibited from accepting gifts from players, coaches, owners,
etc., because it would give the ―appearance of impropriety‖.
The Nevada legislature recognized early on that the very concept of allowing
floor supervisors, pit supervisors and box supervisors to receive tips, would not instill
public confidence in the integrity of casino table games.
As previously stated, the gaming industry is vitally important to the economy of
the State and the general welfare of the inhabitants. The continued growth and success of
gaming is dependent upon public confidence and trust that licensed gaming…are
conducted honestly and competitively…and that gaming is free from criminal and
corruptive elements.
Public confidence and trust can only be maintained by strict regulation of all
persons, locations, practices, associations and activities related to the operation of
licensed gaming establishments.
All establishments where gaming is conducted… must therefore be licensed,
controlled and assisted to protect the public health, safety, morals, good order and general
welfare of the inhabitants of the State, to foster the stability and success of gaming and to
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preserve the competitive economy and policies of free competition of the State of
Nevada.
The Nevada Legislature‘s overriding concern with respect to table game
integrity, are licensees permitting the operation of table games, absent sufficient
supervision, which would frustrate important state policies and potentially compromise
public confidence in Nevada‘s ability to regulate casinos. Gaps in casino table game
supervision, allows the very elements Nevada worked so hard for so long to expel from
casinos, to reclaim a foothold and undermines the Legislatures‘ effort to preserving the
honesty, integrity and fairness in the gaming industry today.
The Nevada Gaming Control Boards‘ Minimum Internal Control Standards
(MICS), require these ―table games supervisors‖ to be the human controls, in the form of
―required supervision‖ and further require that there be ―strict segregation of duties and
responsibilities‖ to inhibit collusion.‖
As a result, since 1955, the Nevada gaming industry standard is that ―table games
supervisors‖ are not authorized to accept tips. This is in keeping with the spirit of
Nevada‘s gaming regulatory policies.
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The Nevada Legislature Enacted NRS 608.011, Which When Read With NRS
608.160, Prohibits Floor Supervisors, as Statutory Employers, From Taking or
Sharing in Dealer Tips
Integrity of the game considerations aside, the plain language of NRS 608.011,
coupled with 608.160, acts as a further bar to ―table game supervisors‖ sharing in a
dealers tip pool.
NRS 608.011, states in pertinent part:
NRS 608.011 “Employer” defined. ―Employer‖ includes every person having
control or custody of any employment, place of employment or any employee.
NRS 608.160, states in pertinent part:
NRS 608.160 Taking or making deduction on account of tips or gratuities
unlawful; employees may divide tips or gratuities among themselves.
1. It is unlawful for any person to:
(a) Take all or part of any tips or gratuities bestowed upon his employees.
(b) Apply as a credit toward the payment of the statutory minimum hourly wage
established by any law of this State any tips or gratuities bestowed upon his employees.
In Nevada, whether an individual is considered a supervisor depends on that
individual's authority over another employee or employees -- not merely by a title or the
employers‘ job description.
In Nevada, a supervisor is defined as any individual who has the authority, acting
in the interest of an employer, to cause another employee to be hired, transferred,
suspended, laid off, promoted, discharged, assigned, rewarded, or disciplined, either by
taking such action or by recommending it to a superior. The exercise of such authority
may not be of a merely routine or clerical nature, but requires independent judgment.
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Nevada Department of Human Resources v. Hibbs, 538 U.S. 721 (2003). State of
Alabama v. F Marshall State of Nevada, 626 F2d 366 (1980).
In fact, in the case at bar, as demonstrated by testimonial and documentary
evidence, Wynn Casino‘s ―table game supervisors,‖ specifically, floor supervisors, box
supervisors, pit supervisors, CSTL‘s, or whatever you want to call them, are supervisors,
that is, managerial employees or agents. A managerial employee is one who represents
management interests by taking or recommending actions that effectively control or
implement employer policy.
Additionally, in light of the fact that the Nevada Revised Statutes do not
recognize a ―CSTL‖ as a gaming employee, proper application of NRS 463.0157,
requires this administrative body to recognize the Nevada gaming employees to whom
Wynn Casino refers, are either as floor supervisors, box supervisors or as pit supervisors.
Whether or not they are properly labeled by Wynn Casino as ―table games
supervisors,‖ these individuals are, by law, employers pursuant to the statute, NRS
608.011. Accordingly, as ―statutory‖ employers, these ―table game supervisors,‖ are
prohibited from participation in the dealers tip pool. NRS 608.160.
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Wynn Casino’s Direct Benefit From Implementation of the Tip Pooling Scheme,
Violates Nevada Law and Policy and is Prohibited by Nevada Case Law
In the case at bar, Wynn Casino freely admits the radical changes they
implemented were in response to the needs of their business. Andrew Pascal, testified
that a significant pay disparity existed that had to be reconciled.
The two positions involved were the floor supervisor position and that of dealer,
with the former being paid at $60,000 per year and the dealers earning approximately
$100,000 per year in combined wages and tips. A widening disparity between the wages
earned by dealers and casino floor supervisors caused the casino to alter the structure of
its table games division, Pascal said.
Pascal said that Wynn Las Vegas dealers are the highest paid dealers in the city,
averaging about $100,000 per year in salary and tip earnings. But the employees
supervising the dealers were averaging about $60,000 a year in salary, Pascal said.
Because of our property, that disparity has gotten wider, Pascal said, citing Wynn's
emphasis on high-end play as one reason its dealers' tokes are larger than most Strip
properties. There was no incentive in the division to advance and grow. Everybody
wanted to become dealers, he added.
However, Wynn Casino did have another option. Wynn Casino could have
rectified their internal payroll concerns for the table games department, by simply
compensating their ―table games supervisors‖ with higher salaries.
The diversion of tips from casino dealers benefits no one except the Wynn
Casino, which secures higher compensation for its ―table game supervisors,‖ without
having to pay for it. This use of employee tips, by an employer for its own purposes and
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direct economic benefit, as demonstrated here (as a substitute for salaries that the
employer would otherwise have to pay itself), is prohibited by NRS 608.160.
In adopting the court‘s rationale regarding tip pooling in Moen, the Nevada
Supreme Court held that an ―…employer shall not retain any part of the tips for its own
use; or (2) reap any direct benefit from the pooling. Alford, Id. The court strongly
emphasized the importance that ―Harolds Club, only reaped collateral benefits of higher
employee morale and lower employee turnovers‖ and that ―the change brought Harolds
Club, into conformity with general gaming industry practice throughout the state.‖ In
Cotter, the court held that ―Caesar's Palace was acting under color of state law instituting
the new policy as it because it relied on Nevada precedent that required dealers to share
with other dealers.‖ The court noted, ―Forced tip-sharing does not violate Nevada law or
policy so long as the employer does not ―reap any direct benefit from the pooling and
provided that the ―new procedure does not violate Nevada law or policy.‖
Wynn Casino has defied legal precedent and Nevada case law, in that their tip
pooling scheme was instituted so that the casino would ―reap a direct benefit‖ from the
pooling. Alford, Id. The court strongly emphasized the importance that ―Harolds Club,
only reaped collateral benefits of higher employee morale and lower employee turnovers‖
and that ―the change brought Harolds Club, into conformity with general gaming industry
practice throughout the state‖.
Here, Wynn Casino has not acted under color of state law in instituting the new
policy, which as previously demonstrated, violates Nevada State law and flies in the face
of existing case law. Nor did Wynn Casino seek conformity with the general gaming
industry practice throughout the state.
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The Repercussions of Wynn Casino’s Unlawful Expansion of the Dealer Tip Pool;
The Beginning of the Demise of the Nevada Gaming Industry as We Know It
Without gaming, Nevada would be a wonderful truck stop on the way to
California. Gambling turned Nevada into the little state that could. No longer does the
majority of the national population look at gaming as an evil business and therefore
gaming operators can easily move not only in the tourism industry, but in the local
community. Investors now line up for the opportunity as do gamers who now see
themselves as entertainment seekers.
The public policy is to protect the integrity of the gaming industry through strict,
fair and consistent regulation. The tourism industry and the Nevada way of life would be
profoundly different today, had gaming not been legalized and regulated effectively
throughout this period. The Nevada Gaming Board and Gaming Commission bear the
primary responsibility for regulatory policies, on gaming industry issues which arise.
However, what Wynn Casino implemented here, is far more than a policy change.
Wynn Casino attempted to circumvent the process by which law is made in Nevada.
In the case at bar, we now see ―first hand‖ how the Wynn Casino‘s radical
departure from the traditional gaming industry standards, has jeopardized the interests of
the State of Nevada, the welfare of its residents and resident businesses. By implementing
these unauthorized radical changes, Wynn Casino has unlawfully shifted its financial
burden, of paying the ―table game supervisors,‖ to its‘ dealers, by unlawfully accessing
the dealers‘ tip pool. Furthermore, through the misclassification of these employees,
Wynn Casino is reaping an unfair competitive advantage over law-abiding casinos, who
are in compliance with Nevada‘s gaming industry standards.
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How will these businesses respond to Wynn Casino‘s unfair competitive
advantage? Throughout Nevada, casinos have taken a ―wait and see‖ approach. But what
at first started as industry rumblings, have led to overt proclamations indicating that if
Wynn Casino is successful, similar changes would be adopted.
Finally, Wynn Casino‘s misclassification of these ―table game supervisors,‖ has
undermined the spirit and intent of NRS 608.160, which was enacted to ensure
employees tips are not illegally diverted to the tills of their employers.
Wynn Casino‘s misclassified the floor supervisors and pit supervisors, as CSTL‘s,
when in reality they are in fact, nothing more that ―table games supervisors;‖ supervisors
who are prohibited from receiving tips because of their responsibility of maintaining
―integrity of the game‖ on the table games to which they are assigned.
Again, regardless of what their employer calls them, in Nevada, by law, they are
either: floormen, boxmen, or supervisors. NRS 463.0157(1)(b)(m)(v). Moreover,
regardless of what their job description says, these ―table games supervisors‖ are required
by the Nevada Gaming Control Board to ―provide supervision of all table games.‖
Nevada Gaming Control Board, Minimum Internal Control Standards (MICS)
Compliance Checklist for Table Games.
Nevada gaming regulators have a vested interest in keeping the casino industry
free of gaming integrity scandals, which would compromise public trust and jeopardize
the State‘s interests.
Accordingly, the Labor Commissioner must make certain the full weight of
justice is brought down upon Wynn Casino by levying of the maximum monetary penalty
allowed by law.
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If a “CSTL” is Not a “Table Games Supervisor” Pursuant to NRS 463.0129, Then
This Would Be An Unauthorized Radical Departure From Nevada’s Record of
Strict Conservatism; Only the Nevada Legislature Can Make New Law
Having been issued a casino gaming license, Wynn Casino is but a ―mere‖
gaming licensee of the State of Nevada. As such, Wynn Casino has agreed to and is
subject to gaming regulation as administered by the State of Nevada. NRS 463.0171.
In an effort to better their profit margins, Wynn Casino has attempted to re-label
the traditional job titles, which are part and parcel of the Nevada gaming industry. Even
though it might sound more sophisticated, a vertical engineer is still, an elevator operator.
There is no provision in the Nevada Revised Statutes that would permit a
―licensee‖ to institute such a radical change in the statutorily regulated gaming industry.
Wynn Casino has acted without Legislative or regulatory approval.
What if all licensees took it upon themselves to make such unauthorized radical
changes? Clearly the State of Nevada‘s interests are jeopardized by such unauthorized
unilateral action.
This unauthorized radical departure from Nevada‘s conservative regulatory
gaming philosophy, threatens the economic welfare of the State, its‘ residents and
resident business.
It is but the first step down a path that Nevada‘s regulatory gaming experience
tells us, would be better to avoid. Where there is no assurance of gaming integrity – there
is no game.
Since 1931, Nevada has regulated gaming within the State. That‘s seventy nine
years. Wynn Casino opened in 2005. This scenario is precisely why gaming licensees are
not permitted to ―willy-nilly‖ do as they please.
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What Should a Casino Licensee Have Done in a Case Like This? Take it to the
Nevada Gaming Policy Committee
As a Nevada gaming licensee, Wynn Casino was obligated to operate within the
established gaming regulatory structure in order to effectuate a change. Nevada Gaming
Commission Regulation 5.010. In the heavily regulated Nevada gaming industry, in no
way, shape or form was Wynn Casino, a ―mere‖ gaming licensee, authorized to
implement these radical changes, in defiance of the law, in an effort to save money and
improve their ―bottom line.‖
The issues presented herein, are precisely why the Gaming Policy Board exists
today. The Gaming Policy Board, whose exclusive purpose was to discuss matters of
gaming policy, was created by legislation in 1961. NRS 463.021.
Currently, the Gaming Policy Committee is an eleven-member committee
comprised of: the Governor; one State Senate member; one State Assembly member; one
Nevada Gaming Commission member; one member of the State Gaming Control Board;
one member of a Nevada Indian tribe; and five members appointed by the Governor (two
representatives of the general public, two representatives of nonrestricted gaming
licensees, and one representative of a restricted gaming licensee). The Committee meets
at the call of the Governor to discuss matters of gaming policy. Recommendations
concerning gaming policy made by this committee are advisory to the Commission.
For the reasons previously discussed in great detail herein, without a doubt, the
Gaming Policy Committee would never have approved such a radical departure from
Nevada‘s conservative gaming regulatory approach. It is fair to infer from their actions,
that Wynn Casino realized this, and acted accordingly.
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Conclusion
The State of Nevada legalized gambling in 1931, long before any of the existing
―crop‖ of gaming licenses were issued. The integrity of every aspect of Nevada‘s gaming
industry is the result of decades of effort, and regulators will insure that its integrity is not
sacrificed by radical changes to the regulatory framework.
With respect to the gaming industry, based on seventy nine years dedicated to the
refinement of casino regulation, the Legislature of the State of Nevada is without
question the foremost authority in the United States on the subject.
It has often been said of Nevada‘s onerous gaming licensure application process,
―In the United States, there is regulated industry and there is heavily regulated industry –
and then, there is the Nevada gaming industry, where nothing is left to chance.‖
It is with that vast experience and knowledge of every aspect of casinos and of
casino regulation, that the Nevada State Legislature enacted NRS 463.0157, which
defines the complete list of ―gaming employees‖ within the state. ―Boxman,‖ ―Dealers,‖
―Floormen‖ and ―Supervisors,‖ are defined as gaming employees.
The Nevada Legislature regulates gaming within the state, via the Nevada
Gaming Control Board and the Nevada Gaming Commission.
Early on, the Legislature established that all gaming licensees must provide
assurance of the integrity of table games, by requiring supervision, independent of the
dealers. The Nevada gaming regulatory bodies requirements for internal controls (MICS),
mandate casino supervision of all table games, to provide assurance of ―integrity of the
game.‖
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The Nevada Gaming Control Boards‘ Minimum Internal Control Standards
(MICS) for Table Games is twenty six pages in length. There are no less than thirty three
references to the requirement of ―table games supervision.‖ The primary purpose of
internal controls is two-fold: to provide game integrity and protect assets.
Internal controls seek to avoid jeopardizing ―integrity of the games‖ on the casino
floor by mandating ―table games supervisors‖ as human controls in the form of required
supervision; and further mandate a strict segregation of duties and responsibilities‖ to
inhibit collusion. (See, MICS).
Regarding discipline for a licensee‘s failure to comply, the Nevada Gaming
Commission and Gaming Board, state that ―any activity on the part of any licensee, his
agents or employees, that is inimical to the public health, safety, morals, good order and
general welfare of the people of the State of Nevada, or that would reflect or tend to
reflect discredit upon the State of Nevada or the gaming industry, to be an unsuitable
method of operation and shall be grounds for disciplinary action by the board and the
commission in accordance with the Nevada Gaming Control Act and the regulations of
the board and the commission. Without limiting the generality of the foregoing, the
following acts or omissions may be determined to be unsuitable methods of operation: 1.
Failure to exercise discretion and sound judgment to prevent incidents which might
reflect on the repute of the State of Nevada and act as a detriment to the development of
the industry. Regulation (5.011 Grounds for disciplinary action).
NEVADA GAMING COMMISSION AND STATE GAMING CONTROL BOARD
REGULATION 5
OPERATION OF GAMING ESTABLISHMENTS
5.010 Methods of operation.
5.011 Grounds for disciplinary action.
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5.010 Methods of operation.
1. It is the policy of the commission and the board to require that all
establishments wherein gaming is conducted in this state be operated in a manner
suitable to protect the public health, safety, morals, good order and general
welfare of the inhabitants of the State of Nevada.
2. Responsibility for the employment and maintenance of suitable methods of
operation rests with the licensee, and willful or persistent use or toleration of
methods of operation deemed unsuitable will constitute grounds for license
revocation or other disciplinary action.
5.011 Grounds for disciplinary action. The board and the commission deem any
activity on the part of any licensee, his agents or employees, that is inimical to the
public health, safety, morals, good order and general welfare of the people of the
State of Nevada, or that would reflect or tend to reflect discredit upon the State of
Nevada or the gaming industry, to be an unsuitable method of operation and shall
be grounds for disciplinary action by the board and the commission in accordance
with the Nevada Gaming Control Act and the regulations of the board and the
commission. Without limiting the generality of the foregoing, the following acts
or omissions may be determined to be unsuitable methods of operation: 1. Failure
to exercise discretion and sound judgment to prevent incidents which might
reflect on the repute of the State of Nevada and act as a detriment to the
development of the industry.
Supervision of casino table games is provided by ―table games supervisors,‖ that
is floor supervisors, box supervisors and pit supervisors. NRS 463.0157.
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The purpose was to inspire public confidence that although the odds may have
been long, at least the game was fair. The requirement of providing assurance of ―gaming
integrity,‖ quite naturally fell upon the ―table games supervisors‖ because of the position
of authority which they held in relation to the games and the gamblers.
Besides providing assurance of ―gaming integrity,‖ Nevada casino licensees, like
Wynn Casino, receive additional benefits such as asset protection from the ―table games
supervisors.‖
Having the responsibility to resolve disputes on the table games to which they
were assigned, means these managerial employees, ―table games supervisors‖ are not
allowed to receive tips.
Their employer, Wynn Casino, as a gaming licensee, has accepted Nevada‘s
regulatory mandate that requires that these designated employees provide assurance of
―integrity of the table games.‖
This is the current Nevada gaming industry standard: ―table games supervisors‖
are not authorized to receive tips.
We are not talking about Starbucks; this is the Nevada gaming industry.
Just look at gaming‘s history. It is these ―table games supervisors‖ who are
charged with the responsibility of maintaining ―game integrity.‖ Any table game on a
casino floor involves the dealer, the players and the ―table games supervisors,‖ who
resolve disputes. In the eyes of Nevada, foremost among their responsibilities however,
are to provide assurance of game integrity. What this means is, that no player receives an
advantage over the other players; there is no other way to provide any assurance of
gaming integrity.
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Nevada gaming regulators have a vested interest in keeping the casino industry
free of gaming integrity scandals, which would compromise public trust and jeopardize
the State‘s interests.
These managerial employees have always been charged with customer service
responsibilities. But due to the nature of their job, they cannot receive tips.
The Nevada Legislature further clarified that issue by enacting NRS 608.011,
which deems these ―table games supervisors‖ to be employers, under the statute. As
―statutory‖ employers, ―table games supervisors‖ are prohibited from participating in a
dealers‘ tip pool. NRS 608.160.
Furthermore, the Nevada Revised Statutes do not recognize Wynn Casino‘s
creation, this ―CSTL‖ as a gaming employee. NRS 463.0157. Therefore, until such time
as the Nevada Legislature adopts this ―CSTL‖ as a ―gaming employee,‖ the holders of
this title at Wynn Casino, shall, for the purposes of this adjudication, be deemed to be
either floor supervisors, box supervisors or pit supervisors. NRS 463.0157.
What Wynn Casino implemented here, is far more than a policy change. Wynn
Casino attempted to circumvent the process by which law if made in Nevada.
Accordingly, absent the Nevada Legislature‘s enactment of either new law, or an
amendment to the existing law, there exists no basis upon which this Administrative
Agency can deem Wynn Casino‘s actions lawful or authorized. Wynn Casino‘s adoption
of these radical changes to the casino floor, constitutes a complete abrogation of their
duties and responsibilities as a Nevada gaming licensee; and an absolute rejection of
gaming regulatory compliance.
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In the case at bar, the unlawful expansion of the dealer tip pool, has ―poisoned‖
the tip pool, and subjects Wynn Casino, to liability to all employees who were lawful
participants in the tip pool.
Wynn Casino‘s actions can at best, be described as an attempted ―radical
departure‖ from Nevada gaming industry standards.
At worst, Wynn Casino‘s actions can be viewed as ―dangerous,‖ in that the
interests of the State of Nevada are jeopardized by this licensees reckless disregard for all
that the State Legislature has fought so hard to achieve.
First, Wynn Casino re-labeled these ―table games supervisors‖ as CSTL‘s. Wynn
Casino then misclassified these CSTL‘s, as ―tipped employees,‖ while unlawfully
accessing the dealer‘s tip pool. This misclassification led to Wynn Casino unlawfully
shifting its‘ financial burden of paying the ―table games supervisors‖ (CSTL‘s), to its‘
dealers.
Furthermore, through the misclassification of these employees, Wynn Casino has
been and is continuing to reap an unfair competitive advantage over law-abiding casinos,
which are in compliance with Nevada‘s gaming industry standards.
Additionally, Wynn Casino has misrepresented these CSTL‘s as not being ―table
games supervisors‖ – for purposes of this proceeding, despite the fact that these CSTL‘s
have been deemed ―supervisors‖ by the Nevada Department of Employment, in
unemployment insurance hearings of former Wynn Casino dealers.
More significantly, in order to demonstrate compliance with the Minimum
Internal Control Standards (MICS), Wynn Casino admits these CSTL‘s are supervisors
for the Nevada Gaming Control Board and Gaming Commission.
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Lost amid the demonstrated multiple ―takings‖ in violation of NRS 608.160; and
the multiple breaches of fiduciary duty with respect to the misappropriation of interest
earned on the dealers‘ tips and all the tip count errors, is Wynn Casino‘s admission that it
had no intention of complying with the letter of the law.
During the hearing before the Labor Commissioner, Wynn Casino President,
Andrew Pascal testified under oath that even if the dealers/tip pool members had voted to
exclude the CSTL‘s and boxmen from the tip pool, Wynn Casino management would not
have honored their wishes.
This is another clear repudiation of the law that must be addressed.
Pursuant to Nevada law, the dealers/tip pool members have the right to enter
―…into an agreement to divide such tips or gratuities among themselves.‖ NRS
608.160(2).
It is clear that the legislative intent was to provide tip pool members with the right
to choose, because after all, the tip pool funds do belong to the dealers/tip pool members.
Before concluding, it must be pointed out that nothing contained herein is meant
to denigrate the Wynn Casino ―table games supervisors‖ who hold the job title of CSTL.
These ―table games supervisors‖ simply have been put in an untenable situation by their
employer. They too deserve to be duly compensated for the outstanding job that they do
on behalf of Wynn Casino. Unfortunately, by law as a CSTL, that is, a ―table games
supervisor,‖ that compensation cannot be the result of the unlawful inclusion in the
dealers‘ tip pool.
The record of conservatism by Nevada‘s regulators is justified because the
strength of Nevada‘s gaming system depends on its reliability and predictability. The
230
integrity of every aspect of Nevada‘s gaming industry, is the result of decades of effort,
and regulators must insure that its integrity is not sacrificed by radical changes to its‘
regulatory framework.
The State of Nevada hopes that each legitimate gaming enterprise within the state
thrives and goes beyond the hopes and dreams of their investors. For the success of
Nevada‘s economy, is linked to the success of these individual businesses. However, the
interests of an individual casino (here, Wynn Casino) in improving their profit margins,
shall not take precedence over the interests of the State of Nevada, with regard to the
gaming industry within the state.
To ensure that the interests in its gaming industry as a whole, takes center stage,
Nevada has essentially adopted the approach that no individual gaming licensee, here,
Wynn Casino, is greater than Nevada‘s commitment to the gaming industry as a whole.
To that end the Nevada Legislature enacted NRS 463.0129(2). Under this statute, casinos
are but ―mere‖ licensees. They are holders of a revocable gaming license, with no vested
rights therein or thereunder.
Finally, a ruling for Wynn Casino would serve to undermine seventy nine years
worth of effective legislative regulation of the gaming industry, in the State of Nevada.
Whereas a finding for Meghan Smith, serves to validate many years worth of sound,
conservative, well reasoned legislative gaming regulation. The public policy is to protect
the integrity of the gaming industry through strict, fair and consistent regulation. The
tourism industry and the Nevada ―way of life,‖ would be profoundly different today had
gaming not been legalized and regulated effectively throughout this period.
231
In brief, Wynn Casino claimed that it only sought to expand the dealers tip pool,
in accordance with Nevada law.
In fact, as demonstrated, Wynn Casino sought to make history.
The facts are undisputed, the law is crystal clear. The words of the applicable
statutes are precise and not open for interpretation.
Nevada gaming regulators have a vested interest in keeping the casino industry
free of gaming integrity scandals, which would compromise public trust and jeopardize
the State‘s interests.
Accordingly, as a result of Wynn Casino‘s complete and utter failure to abide by
the terms of its‘ revocable Nevada gaming privilege, as well as their total disregard for
the potentially catastrophic consequences of their actions, the Labor Commissioner must
make certain the full weight of justice is brought down upon Wynn Casino, by levying of
the maximum monetary penalty allowed by law, together with attorneys‘ fees for
Claimant.
This will send a clear and apparently necessary message to the gaming industry,
that with respect to regulation and welfare of the gaming industry within the state, make
no mistake, Nevada‘s interests are paramount.
In keeping with Nevada‘s conservative gaming history, a strong message must be
sent to licensees as a deterrent, to prevent them from implementing such radical changes
in the future.
DATED: March 22, 2010 Respectfully Submitted,
CECIL M. HOLLINS, ESQ. LAWRENCE JAY LITMAN, ESQ.
