Question of the Day - 16 March 2007

We answered a similar question on 1/4/07, but we're asked this all the time. For some reason, casino hosts' salaries are a matter of great interest.

A few independent or freelance hosts, such as Steve Cyr, the main character in Deke Castleman's book Whale Hunt, steer high rollers to one or more casinos with which they have a contract or a working arrangement. Since they're independent contractors, they're not paid a salary; rather, they earn a commission from the casino, usually based on the losses of the players they bring in.

For example, if a freelance host brings Mr. A to the Hats and Horns Casino and Mr. A loses $200,000, the host gets a percentage (let's say, 6%) of Mr. A's loss -- as soon as he pays up. So the host makes $12,000 for that trip. And any time Mr. A shows up at the Hats and Horns afterwards, his host collects on the losses.

Now, if Mr. A wins, the host makes nothing. So he's rooting for his player to tank in a big way.

Sometimes an independent host's remuneration is based on his player's overall action. This is known as the "theoretical." The formula here is the average bet multiplied by the time played multiplied by the house advantage. Say Mr. B plays baccarat at $10,000 a hand for one hour at a (in round numbers) 1% disadvantage. His theoretical loss is $5,000 ($10,000 X 50 hands X 1%). The host might make 12% of that, or $600.

Here, it doesn't matter if the player wins or loses in reality. That's why it's called the theoretical: The host's remuneration is based on the mathematical expectation of Mr. B's play. Now the host doesn't care if his player wins or loses. He just wants him to sit at the table for 48 hours straight. He's making $600 every hour that he plays baccarat for $10,000 a hand.

Most casino hosts aren't freelancers. Instead, they’re salaried employees. Some casino companies don't pay their hosts any bonuses, commissions, percentages, or incentives above the regular salaries. However, many do, usually quarterly or annually. Where bonuses are paid, what they’re based on can vary considerably. Usually, like salaries, each host is paid an individual merit bonus, dependent perhaps on the amount of play of his customers, or the number of room nights occupied by his customers, who are "coded" to him.

Other times, a host's bonus can be based on the losses of his players. A few casino companies work more on the team concept, and host bonuses are based on the success of the whole player-representative department in reaching corporate goals.

One thing is for sure: The better casino hosts are among the best-paid casino employees.

Here's a different perspective on today's answer, courtesy of a local tax specialist: "I would actually disagree that hosts are some of the casinos' well-paid employees. As someone who does quite a few tax returns for casino hosts, I can tell you that I'm quite surpised as to how low their compensation is when I do their returns. "At Station Casinos, for example, most hosts are in the $30K-low $40K income bracket, including bonus. At the Palms, slot hosts were in the $40Ks, and that includes their bonuses. A "top end" host at the Palms might be high -- as in the $70K range, including bonuses -- if he/she has mostly table players. "At Harrah's Corp., where bonuses are handed out on a quarterly team basis, a senior host can get hired at around $45k with a bonus potential of another $45k. "The real reason why people want to be hosts is the "unofficial" compensation. Table hosts who "hustle" can easily double their salary in patron tips: Hosts that I know have been invited on private planes, European yachts, fishing trips, to strip clubs, etc. etc. "In my opinion, you couldn't pay me enough to be a host. You're getting it from both ends -- from whiny customers who want everything and don't play enough to qualify for it, and from stingy management that's always finding ways to increase their bottom line."