Dealer gratuity systems: socialism vs. capitalism in poker rooms

Any Canadian poker player that has spent time in other card rooms, particularly those in the United States, can attest to the stark difference in dealer quality based on the gratuity system enforced by the card room.

In the OLG casinos in Ontario, dealers in general (with a few exceptions) are notoriously bad. Speed and competency are severely lacking, and at a casino like Casino Niagara where they charge players a $6 per half-hour fee for playing, dealer speed and competence play an important role if a player wants to be a long term winner at the game.

Contrast this with dealers on the other side of the border. Relatively speaking they are at least twice as fast and are more focused on keeping the game running smooth than their Canadian counterparts.

The reason is quite simple: most cardrooms in Ontario and Canada, under crown corporation ownership, have instituted a 100% socialist policy on gratuities, whereas in most cardrooms in the U.S., dealers keep the gratuities they have earned individually.  In other words, in a casino like Casino Niagara, all tips are pooled together and at the end of the night, they are divided equally amongst all dealers.

Therefore, like communism and socialism, the incentive to excel and put in maximum effort is all but gone.  Why put in any additional effort to deal faster if the net benefit to yourself is an additional penny per hour? You soon realize that the law of averages will severely punish the competent and reward the incompetent (or intentionally lazy).  At the expense of those that put in more effort, those that put in less effort will see more gratuity at the end of the day than what they actually contributed to the group pot. By game theory, the net result for the entire group in this system is far from optimal: since the personal benefit is almost inversely proportional with effort, there will be less effort collectively.

With a capitalist gratuity system, all dealers benefit.  Yes, it is true that really fast and competent dealers will receive more gratuity than their slower counterparts, but by having all dealers recognize their maximum potential because they are proportionately rewarded for their level of skill, speed and competency are maximized, customer satisfaction is maximized, and more players responsible for tipping the dealers will come flocking to that cardroom more often due to the higher quality. Players will be more generous as more hands are dealt per hour, more substantial pots are awarded and a higher rate of tips are dispensed.

This increases the demand for more dealers, even dealers that lie closer to the bottom of the bell curve.  Since there is a steady personal incentive to improve at dealing, all dealers collectively rise in competency and speed which results in a progressive compounding of net gratuities among the group as a whole. Everybody benefits, from the dealers to the players, and everyone in between (wait staff, pit bosses and managers).

Is it any wonder why that Casino Niagara and many other Canadian card rooms are rated so low, gouging players with high rakes, low comps, and terrible dealers? A short hop across the border to Seneca Casino and you’ll have lower rake, better comps and dealers so fast you may as well be playing online.

Systems that redistribute over a collective base become increasingly ineffective as the size of the base grows.  Canadian poker rooms are a microcosm of what happens when you spread socialist policy to a base too large, removing all individual incentive to put in effort or improve unless it is by government force, typically threats of death, imprisonment or destitution. As the size of the collective grows, at some point individuals no longer feel they are contributing to a team, but rather feel that they are cogs in a machine with zero incentive to improve. When the collective base of a socialist or communist regime is as big as an entire nation, then it is easy to foresee the future plight of that nation’s economy.

When you scale back big government so that capitalism can operate at an individual or small community level, you optimize the incentive for smaller teams to put in maximum effort, resulting in a natural growth of all individuals, communities, and eventually the entire nation.

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