8/3/2002
Believe it or not, sales tax is an issue for many people who eat lots of comped meals in Nevada. Does the comp (or coupon) cover sales tax? If you have the slot club booth write you a comp for the exact cost of the meal, do you have to factor in sales tax? Although there’s a statute covering this subject in the NRS (Nevada Revised Statutes), this question can get pretty arcane.
For example, should a casino restaurant charge tax on a comp at all? If you’re issued a comp by the casino to an independently owned restaurant (such as Emeril Lagasse’s eateries at MGM and the Venetian), who pays the sales tax — the casino, the restaurant, or you? And if your food bill exceeds the value of the comp, do you pay sales tax on the entire amount or just the amount that you have to pay in cash? To further complicate matters, many cashiers, wait people, and restaurant managers don’t know the law, so you get conflicting opinions about whether you owe sales tax and if so, how much.
The following is the part of NRS 372.065 that applies to sales tax. It reads: “”Value of coupon issued to customer by retailer, without reimbursement from outside source, is properly excluded from sales price. Where retailer issues coupon, which allows customer to buy at discount or grants customer a price concession in form of rebate and is not reimbursed from outside source, coupon or rebate represents ‘cash discount allowed and taken on sales’ within meaning of sections 11 and 12 of sales and use tax act enacted as ch. 397, stats. 1955 (see NRS 372.025 and 372.065) and is properly excluded from measure of sales tax.”
Whew! No wonder casino food and beverage workers — and everyone else — are confused!
Over the years, from experience and with the help of friends, Romans, and lawyers, we’ve figured out a few things about comps and sales tax. First, the statute seems to say that if the casino issues an in-house comp, it must first be used to reduce the bill. Then, any LEFTOVER amount is subject to sales tax. If your comp is for $10 and your bill before tax is $11, sales tax should only be charged on the $1 remaining, not the whole bill. So you’d owe $1.07 (assuming a 7% sales tax), based on the unpaid $1, rather than $1.70, based on the whole bill.
However, if the restaurant is independently owned and the comp doesn’t cover the tax, then you have to pay the whole tax bill. If your comp is for $100 and your food bill is for $101, you’ll owe $8 ($1 overage, plus $7 in sales tax), not $1.07.
At one casino, which sends you monthly coupons for so much off on a meal, the procedure seems entirely dependent on the whim of the cashier. Twice, I had a coupon for $25 and got a comp from the slot club for what I knew to be the balance of three buffets before tax, which I knew I wouldn’t owe. The first time I didn’t have to pony up any tax money. The second time, a different cashier told me the coupon wasn’t like a comp and I had to pay sales tax!
One player avoids a hassle by getting the server involved financially. For example, if he has a comp for $100 and the charge is $100 plus about $7 tax, he explains to the waiter that comps are not taxable at a casino-owned or casino-run restaurant, then leaves him an appropriate amount intended as their tip, unless he decides to use part of it to pay a tax the restuarant’s not liable for. The only problem with this solution is that a server might be punished for the lack of knowledge of a superior.
I used to get hyper with cashiers and managers who insisted on charging sales tax on our comps or coupons. However, after 18 years and hundreds of thousands of dollars in comped food, I figure life is too short to worry about a few dollars here and there. I do politely question the employee when I believe a mistake has been made, but I let the issue go when it becomes too much of a hassle and I can’t change the mind of the probably under-paid employee.
See? I knew this was more than you wanted to know about this su
8/9/2002
Our week-long road trip to northern Nevada provided us a cool break from the heat of Las Vegas. Unfortunately, the video poker machines we played in Reno and Tahoe were also cool — actually, ice-cold might be a better term.
It’s never as much fun to lose as to win, no matter how many years you’ve been visiting casinos and how “experienced” you feel. This is one of the problems of being a human being, rather than a robot! However, whenever we feel a bit down during a losing spell, when it’s hard for the got-it-straight-in-the-head to get through to those human emotions, we run to our gambling logs of years past. And when we see how well we’ve done overall, we realize that this losing period is just a blip in the long-term results and will eventually be swallowed up by the positive total that dominates.
This ability to look back at your detailed past playing history is one of the best aids a gambler can have. First, a gambling log provides most of the information the IRS might require in case you’re audited. (I talk at length — in a VERY long chapter — about taxes and the gambler in More Frugal Gambling, which is still on track to come out in the fall.) But even more important, a log keeps you from fooling yourself about your gambling.
Gamblers are noted for selective memory; they have a strong tendency to remember only what is good and forget the bad. It’s so easy to recall the time you hit a big jackpot on that so-much-more-fun VP machine you played, even though you knew it had a terribly low pay-out schedule, so you want to play that “lucky” machine all the time. Somehow, however, your brain just doesn’t seem to remember all those times you played that machine and lost your kazoo. You figure it doesn’t really matter which table game or machine you choose; it’s all a matter of luck and you don’t remember the exact figures to prove or disprove this.
I may surprise you by this comment: Yes, in the very short term, luck does play a VERY strong role in all gambling endeavors.
STOP! I just realized that I have gotten wound up on this subject. I have a lot more to say, but I think I’ll leave it for next week. Not a real cliff-hanger, I know, but I hope that many of you who read this column are looking for practical help to make your casino experiences more fun — by winning more, or at least losing less. So I’ll be giving more helpful information on this same subject next week.
In the meantime, I want to finish up in a little lighter tone with one of my favorite famous-person quotes:
Referring to his mother’s visit to Las Vegas the weekend before she died, former president Bill Clinton said. “”She got to go to heaven four days early.”
8/16/2002
August 16 — Frugal Fridays
Last week I promised that I would give you some more reasons why it’s important for a gambler to keep a gambling log, and not just for the IRS, but as a way to “keep you honest” in your evaluation of your past gambling activities, with an eye toward helping you do better in the future.
Many players dismiss the concept of long-term results based on sound math principles: “I don’t play enough to ever reach the long term, so it doesn’t matter what game I play; luck is more important than math.” And perhaps you do play so rarely that luck IS the main element.
However, I’m guessing that most people who read this column gamble in a casino more than just a few hours a year. And it’s true that no one can tell you when you will reach the “long-term” results that the math promises, but I can say with certainty when that long-term STARTS: the first time you make a bet.
If you have already been keeping a log for a long time as we have, you’ve probably, albeit slowly perhaps and with lots of ups and downs along the way, seen your long-term bottom line gravitate toward the expected mathematical results of the games you play. Since we play almost entirely in positive situations and have been doing so for many years, our results long-term are in the black. If you haven’t been tracking your gambling action, I challenge you to start doing so today. Even if you always play positive games, I can’t guarantee that your bottom line will be positive early on; there isn’t a level path to the long term. There will be the fun hills and mountains when you’re winning, but there will be short AND long dips and valleys when you have the hard-to-take losses. But the TREND will eventually be to positive results.
The opposite is just as true. If you play negative games, you may have a positive bottom line for a little while. But just as sure as the sun sets in the west, you’ll be heading south — toward a negative bottom line — sooner or later.
If all these references to positive and negative playing situations are Greek to you, you need to do some studying. I wrote the book The Frugal Gambler for this very purpose: to give players enough information and a list of resources that they could choose better games and play them better. Once you’re knowledgeable about the odds of various games, keeping a log will help you to eventually judge which playing choices are leading you to better overall results. I always suggest that players who are really serious about losing less and winning more in a casino keep a log that tracks each type of game separately, so they can easily see how they’re doing on each.
I leave you with this quote from an unknown source: “If you ain’t just a little scared when you enter a casino, you’re either very rich or you haven’t studied the games enough.”
8/23/2002
My discussion in the last two columns about the short term and long term and the role of luck in positive-play video poker has brought some e-mails. One came from a friend of mine who plays VP for a living, averaging seven to eight hours every day, seven days a week. (As Bob Dancer often says, “A hard way to make an easy living.”) I want to share his letter with you, not because a lot of people will want to approach VP his way — very few do — but because he plays an extremely large number of hours and what he says about the long term is sobering.
My friend starts out quoting from my column: “”I may surprise you by this comment: Yes, in the very short term, luck does play a VERY strong role in all gambling endeavors.”” Then he gives his thoughts:
“I think you should strike ‘in the very short term.’ Just talk to Mr. X [a fellow professional]! Over his last three million hands, he is .65% below ‘expectation.’ If that were I, playing with (most of the time) an advantage of .3% to .4%, I would have gone broke years ago. Since Mr. X has been playing with a .7% to a 1.1% advantage (full-pay Jokers Wild with .5% cashback and full-pay Deuces Wild), he’s winning just a little bit, instead of making a good living. Unfortunately, his expenses far outweigh his earnings during that period (two-plus years). He has calculated that his current Deuces Wild streak is just over three standard deviations below ‘normal,’ or just under a .1% chance of occurring. For more than three million hands, luck is still a BIG factor! Most people will not play that many hands in their lifetime!
“And look at me. This year, I have played more than a million hands. I should be averaging about $40/hour. Instead, I’m averaging $70/hour, 75% ABOVE expectation. For more than a million hands! ‘Very short term’? I don’t think so.
“Don’t sugarcoat it! You can play the best games with close to perfect strategy and an ‘adequate’ bankroll (less than 1% risk of ruin) and still lose money for several million hands, or at least a year or two or three of full-time play. It can and does happen. And, of course, the opposite is true. You can make much more than ‘expectation’ would indicate you should!
“I have run dozens of computer simulations of 100 million hands, or more than 50 years of full-time play. Many of these have varied from ‘expectation’ by over .1%. That is quite a significant amount, when you’re playing with an advantage of less than .5% most of the time. And these simulations don’t consider strategy errors and tipping, both of which tend to skew the results toward the negative.
“Bottom line. In any person’s lifetime, even if they were to play video poker full time for 50 years, luck IS a factor! The more hands they play, the less of a factor it is, but it is ALWAYS a factor!”
I have some comments on this e-mail and on the whole subject of long-term expectation. We will continue this discussion here next week. In the meantime, here’s the light-hearted ending you have come to expect.
Bravery or foolishness? Reported by “The Dealer’s News,” a monthly newsletter dedicated to gaming employees: A couple of years ago a robber showed a gun to a change person at Nevada Palace and demanded money.
She said, “No way,” and he ran out the back door.
8/30/2002
This week, I’m going to finish up the topic of losing and the long term we’ve been discussing for the past three posts — and I imagine that some of you will be happy to hear that. The truth is, long-term results are of extreme interest only to those players who gamble when they have the advantage. This includes a VERY SMALL percentage of casino gamblers, a group made up mainly of skilled and experienced live poker players, blackjack card counters, and video poker students. There are a very few niche betters who can make a profit in a casino race or sports book, or by looking for bonusing and/or progressive slot machines, or by utilizing special promotions, tournaments, or coupons on usually negative games.
As for the full-time professional gambler we quoted at length last week, there are so few of these that the percentage would have to have several decimal places in it. Gamblers who make their complete living in a casino are rare birds indeed.
However, for the video player who is trying to make a profit in a casino — whether one who plays every day for a living or just a few days a year on vacation, our friend’s words must be taken very seriously.
On the other hand, these words and statistics were not given to discourage anyone. Most serious video poker players who choose the best pay tables, study and practice to play a very accurate strategy, and who have an adequate bankroll will see a trend toward the their goal: profit. It’s not a straight road up, by any means, but the longer you play the better the chance you have to reach that goal.
If you play only negative games (or positive games without the necessary accuracy), the longer you play the surer you can be of reaching the LOSING long term. Luck can make you a temporary winner, but you can only depend on math for long-term profit.
I’m pounding on the same drum I have for years; I’m not saying that making a financial profit is the only “”good”” goal in a casino. Actually, I believe that having fun is the most important one, and it’s certainly the most common one among casino visitors. And I think the casinos do a bang-up job in providing entertainment.
My wish for everyone is that they take advantage of all the great gambling resources that are available today — in the bookstores, on the Internet, in the magazines you can have delivered to your home. Almost everyone (well, maybe except for the Warren Buffetts of the world) has a limit to the amount of money they’re able or wish to spend having fun in a casino. The smarter you gamble, the longer you can extend this time of fun. Information is power — an old cliche. But old doesn’t necessarily mean worn-out or out-of-date. Being informed will bring you wealth in a casino — if not wealth in the financial sense, at least a wealthy amount of pleasure.
I wish you all casino wealth.