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.
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