Sun editorial:

Killing the golden goose?

Casinos should be careful that nightclub operations don’t end up driving patrons away

Tuesday, March 11, 2008 | 2:08 a.m.

The river of money flowing into the Strip’s premier nightclubs has attracted the attention of the Internal Revenue Service, not to mention some unhappy patrons.

The IRS is investigating two clubs operated by Pure Management Group Pure in Caesars Palace and LAX at the Luxor looking at the possibility that club employees were hiding income from the federal government.

The top clubs on the Strip take in tens of thousands to hundreds of thousands of dollars a night. In a story in Sunday’s Las Vegas Sun, casino insiders said the amount of money that flows into nightclubs is astronomical. Because it is often cash, it is unclear where it goes and how much of it is reported.

The IRS investigation could bring additional scrutiny from state gaming regulators. Even though the clubs are not owned by the casinos, state regulators have the ability to investigate whether the casinos, which have a business relationship with the clubs, were turning a blind eye toward the clubs’ practices.

Both MGM Mirage, which owns the Luxor, and Harrah’s Entertainment, which owns Caesars, are reviewing the situation. MGM Mirage spokesman Alan Feldman said the company can remove any business partner that puts its gaming license at risk.

Casino companies and nightclub owners should realize that their operations may do more than draw the authorities’ attention. The investigations have given air to patrons’ complaints. One couple profiled Sunday in the Sun told of a club where there was an expectation that a patron should hand over cash for anything from getting in to going to the head of the line to use the restroom.

The whole thing smacks of unbridled greed, and that could be worse than an investigation. The clubs may run their customers off.

Discussion: 3 comments so far…

By nkls3713

3/11/08 at 7:32 a.m.

Suggest removal

Time for these "doormen" that collect up to 500k in cash to pay the piper.

Lucy you got some explaining to do.

Either rat out your bosses by confirming that you pay out a chunk of that cash to managment or you will be held responsible for the taxes on that shakedown dough.
By sunset

3/11/08 at 10:31 p.m.

Suggest removal

And after this editorial, warning the "Casinos" that they should be concerned about unhappy patrons, lets say Tao's (insert Pure Group) reportable revenues drops by 25%, uhhhh oh yeah they will still be the highest grossing restaurant / nightclub in the country. (see list below)

Give me a break, the real issue or warning to issue if any to the "casinos" should relate to licensing with the State Gaming Control Board.

But at the end of the day, do you really think any state agency would take the gaming license away from the top 3 or 4 tax paying entities in the State of Nevada.

Lastly, is paying doormen and other service providers egregious tips a concept unique to Vegas? I think not. Like many other things in Las Vegas, we did not invent this phenomenon but we do it bigger and arguably better than any place on earth.

Tax evasion is wrong. Paying a fee for special treatment is not.

This editorial just does not make any logical sense.

Top Grossing Independent Restaurants in 2007

http://www.rimag.com/archives/2007/04b/t...

1 Tao Las Vegas Restaurant & Nightclub, Las Vegas 55,289,055
2 Tavern on the Green, New York City 38,681,961
3 Joe’s Stone Crab, Miami Beach 28,000,732
4 Tao Asian Bistro, New York City 26,686,141
5 Old Ebbitt Grill, Washington, D.C. 22,062,271
6 Gibsons Bar Steakhouse, Chicago 20,282,060
7 Bob Chinn’s Crab House, Wheeling, Ill. 20,266,332
8 Mix In Las Vegas, Las Vegas 20,200,000**
9 Fulton’s Crab House, Lake Buena Vista, Fla. 19,871,892
10 “21” Club, New York City 19,528,823

I guess Tao seems to be pretty upset by its unhappy patrons?
By pained_girl

3/12/08 at 12:44 p.m.

Suggest removal

I was offered a job as a host at a club, not to be named, and I can tell you the door staff even there was horrible. I couldn't believe the bs they would pull. First of all, advicing that we do not "ask for" money to help people get in, but if they "offer" not only do we take it but not help them get in so they can pay the door guy more. It's insane. I could not believe the way they treated locals and tourists. I saw a night when the door staff would not let a local girl in who was trying to just get her friend out who was drunk. By the way the drunk girl drove home and got a DUI that night since the door guy would not another local in to "rescue" her. I guess he doesn't care (along with the club) that someone trying to help the rest of our city, by not allowing a drunk person on the road, is worth allowing in for even a minute. What's worse is the girl going to resuce the drunk one, has been in that club repeatedly and was called by a friend who worked there to pull her friend out. Wonder what the thoughts of that club owner are now.