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Liz Benston

Strip clubs facing strict rules for slot licenses

15 September 2008

Strip clubs are, in the eyes of Nevada gaming regulators, not like restaurants, convenience markets or grocery stores.

And we're not talking about the obvious differences. The three members of the Gaming Control Board say they don't care whether the women working at the clubs are wearing tops.

They do care when entertainers, typically contract workers rather than company employees, solicit customers for sex and drugs or encourage violation of local "no touching" ordinances.

That's what happened at Topless Girls of Glitter Gulch, a downtown strip club whose attempt to get a slot machine license was shot down by the Gaming Control Board this month after gaming agents making a visit to the club were solicited for prostitution and drugs.

"The activities ... were egregious and obvious," board member Randy Sayre said.

Rather than deny the club a slots license outright, the board deferred a vote pending further investigation.

For a town that celebrates adult recreation, topless clubs have failed spectacularly at rounding out their offerings of booze, smoking and nudity with gambling — underscoring what regulators call a justifiable double standard in the licensing process.

Typically, locations seeking a restricted gaming license — which allows up to 15 slot machines in venues such as bars, convenience stores and groceries — are subjected to cursory background checks. Not so for strip clubs, which are subject to undercover visits and background checks of business associates.

Long after Wall Street replaced mob money in the casino business, underworld figures were still running or working in Las Vegas strip clubs. Much like casinos before money-handling rules and regulatory controls, strip clubs are a cash business ripe for cheating the IRS. Even the best-run clubs are at risk that dancers will solicit prostitution on the side.

Given that Sayre's predecessor was an ex-FBI agent who broke up mob-infiltrated clubs and openly opposed slots in strip clubs, some say the board is predisposed to reject such businesses.

That's perception, not fact, Sayre said.

Yet rather than loosening its hard-line approach toward strip clubs, the Gaming Control Board will likely strengthen its regulatory control over clubs by closing a loophole that has allowed some to avoid harsher scrutiny.

Slots have proliferated in small locations across Las Vegas over the past several years, yet only six topless clubs have restricted slot licenses. None of the clubs was subject to the more stringent investigation required of strip clubs because they added slots when they were restaurants or bars, before getting into the topless dancing business.

Olympic Garden, for example, was initially a Greek restaurant and received approval for topless entertainment a year after adding slots.

Once regulators grant a license, it's difficult to take it back, let alone initiate an exhaustive investigation after the fact.

Sayre said that's a flaw in the system that needs to be fixed.

The Gaming Control Board is considering regulatory reviews of restricted slot locations that switch into different businesses. Though their chief concern appears to be adult clubs, the rules would apply to any small slots venue, "leveling the playing field for everybody," Sayre said.

Since the late 1990s, three topless clubs — Divas Las Vegas, Silhouettes and Sin — have sought slots licenses. All experienced the same fate as Glitter Gulch. Those clubs, now operating as Seamless, Minxx Gentlemen's Club and The Penthouse Club, respectively, still don't have slots.

This hasn't stopped others from trying. Sapphire Gentlemen's Club is seeking a slots license.

"They need to make sure their I's are dotted and T's are crossed before they even approach us rather than cleaning things up when we tell you to clean it up because there was something to be gained by it," Sayre said, referring to Glitter Gulch's efforts, which have included firing dancers who violate the law.

"That's reactive," he said, "not proactive."