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Best of Howard Stutz

Gaming Guru

Howard Stutz

Nevada Regulators Send Illegal Activity Memo

9 February 2006

LAS VEGAS – Nevada gaming regulators have reminded the Strip's major casino operators that responsibility for any illegal activity at their popular late-night clubs and entertainment venues falls onto their shoulders regardless of ownership.

In a memorandum sent late Tuesday, the Gaming Control Board told casino operators they would be held accountable for any regulatory violations that occur within or outside of a nightclub located in a gaming establishment.

Control Board Chairman Dennis Neilander said there wasn't any particular incident of late that caused the board to send the memorandum, but it was to serve as a reminder that gaming licensees need to be vigilant in preventing illegal activity.

"Of particular concern to the board are incidences of excessive inebriation, drug distribution and abuse, violence, the involvement of minors, and the handling of those individuals who become incapacitated while at the club," the memorandum stated.

Neilander said the board and casino security chiefs meet monthly and the issue of illegal activity at the nightclubs sometimes comes up.

"After our last meeting, we felt it was time to put out a reminder that they need to watch what is happening in their clubs," Neilander said.

Many of the popular nightclubs are not run by the casinos; the space is leased to third-party operators. The Hard Rock Hotel, for example, operates Body English; however Drai's at the Barbary Coast and Tryst at Wynn Las Vegas are operated by businessman Victor Drai. Light Las Vegas owns Light and the Caramel Bar & Lounge at Bellagio and Treasure Island's Mist Bar & Lounge.

At the Aladdin, Curve is operated by a third party inside the Desert Passage, which is owned separately from the Aladdin. The shopping mall is attached to the hotel-casino, but the sites are considered separate entities.

A recent letter to the control board by Clark County Sheriff Bill Young also spurred some action, Neilander said. Young told gaming regulators the Las Vegas Metropolitan Police Department was concerned about the booking of various entertainment and performers into the clubs.

Young cited "numerous incidents of violence before, during and after several 'gangster rap' concerts, not just in Las Vegas, but nationally as well," the memorandum said. "The (police) considers these events as serious threats to the community."

Neilander said the board wanted to convey Young's concern about the clubs. Neilander said Young also didn't cite any particular recent incident.

"Given the fact the sheriff expressed some concern, we felt it was important to remind the licensees to be diligent with these clubs," Neilander said.

Police spokesman Sgt. Chris Jones said Young was traveling to Washington, D.C., on Wednesday afternoon and was unavailable for comment.

Nevada gaming regulators can discipline gaming licensees for illegal activity taking place inside their casinos on their property; with action including fines up to gaming license revocation.

The memorandum said the control board expects the casinos and nightclub operators to avoid illegal activity.

"The board will also expect the licensee to perform appropriate due diligence to determine that nightclub owners/operators are suitable," the memorandum stated. "In addition, the board expects that same level of due diligence in determining suitability of entertainment brought onto a licensed property, and will similarly hold the licensee accountable for incidents occurring as a result of entertainment the licensee knew or should have known would likely cause such incidents."

Hard Rock Chief Financial Officer Jim Bowen thought the memorandum was directed at all casinos, but an emphasis was placed on the casinos who lease out their nightclub space. He said the Hard Rock, because of the younger crowd it attracts, believes it operates a diligent program to weed out underage gamblers and partygoers.

However, sometimes incidents will slip through. Bowen said a recent event inside the Hard Rock's Body English involving a celebrity and an underaged guest led to the firing of one security officer and the suspension of another.

"Sometimes, when there is a celebrity involved, people get intimidated," Bowen said. "We have one security department but we have dedicated officers assigned to the nightclub. The incident gave us an opportunity to address this issue."

Bowen said he had heard gaming control agents have been investigating the nightclub scene in Las Vegas.

"This apples to everybody, but I think there is more of a problem where the club operator and the casino owner are not the same," Bowen said.

Palms owner George Maloof said he wasn't sure what led to the memorandum, but he understands the concern. The casino has two popular nightclubs, ghostbar and Rain in the Desert, often frequented by celebrities, with other venues planned for the casino's expansion.

"In Las Vegas, you do the best you can to regulate and control what goes on inside your club," Maloof said.

Neilander said that even casinos that have nightclubs operating inside separately owned shopping malls should be concerned about what goes on inside those venues.

"There isn't much we can do from a regulatory point of view, but from a reputation point of view, you would hope they would have a good relationship with their neighbors and make nothing happens to embarrass the casino," Neilander said.