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September 18, 2014

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NIGHTCLUBS:

Is the party over for Prive?

In letter to regulators, tipster detailed drug use, underage drinking at Planet Hollywood venue

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Prive at Planet Hollywood

The Prive nightclub at Planet Hollywood. Launch slideshow »

Managing a Las Vegas nightclub requires the deft and daring skill of operating a party environment that almost crosses the line into illegal activity. Anything less would be considered too tame to generate a buzz.

Planet Hollywood knew its tenant, the Prive nightclub, was crossing the line but didn’t stop it, and gaming regulators pounced.

Last week Planet Hollywood agreed to pay a $500,000 fine to the Gaming Control Board after acknowledging it knew of illegal and illicit activities occurring at the club, which operates on the mezzanine level above the casino. On Thursday the county denied the club a permanent liquor license, forcing its closure at midnight Tuesday, when its temporary liquor license expired. The club opened less than two years ago.

As a result of the unprecedented enforcement action against Planet Hollywood for allowing a nightclub to run wild, contracts between hotels and their nightclubs are now being rewritten to give the hotels greater authority to lay down the law with nightclub managers.

The investigation of the pink-neon and black-lacquer Prive, which advertises a “South Beach” vibe, dates to last summer, when gaming regulators were sniffing into nightclub operations. Attention focused on Prive when investigators received a letter from a former Prive employee complaining about the use of marijuana and cocaine at the nightclub.

In the letter, the tipster also claimed to have witnessed club management sneaking underage girls into the club and management ordering employees to serve alcohol to underage girls.

Ronald Lyons, the club’s former head of security, says Prive management had a different standard for big spenders and regulars, who were allowed to do drugs in the club while others were removed from the venue.

In a letter that Lyons said he sent to authorities and that he copied to the Sun, he said he was told to allow regulars to use drugs “because they are spending a lot of money,” adding, “Whenever a cocktail waitress or security informed me of drug use and I had to tell them I was not kicking the patron out, it was a very difficult situation.”

Several former employees of the club, who spoke to the Sun on the condition of anonymity, say they witnessed many of the acts that turned up in the Gaming Control Board’s nine-count complaint against Planet Hollywood — including rampant drug use, prostitution and the dumping of intoxicated customers outside the club.

And former employees and others familiar with the club said a secluded area was outfitted with a stripper pole, where VIPs were entertained with women and drugs. They also say management allowed known pimps and drug dealers into the club — people whose services were used by club patrons.

A Metro Police spokesman said Tuesday that the department would not comment on any investigation it might have conducted into Prive until Aug. 4, when the County Commission is scheduled to hear the nightclub’s appeal of the loss of the liquor license.

The ex-employees say they were afraid to identify themselves to regulators or the public because they were threatened with lawsuits.

Indeed, Prive management last year sued Las Vegas entertainment blogger Michael Politz for libel for his unflattering stories about the club, including references to the former worker’s letter to the Gaming Control Board. Prive dropped the lawsuit after reaching a settlement with Politz that prevents him from writing about the club.

A spokeswoman for Opium Group, the Miami company that owns Prive, declined to comment on the specific allegations in the Gaming Control Board complaint and denied the allegations from former employees.

Prive has “zero tolerance toward drug use and prostitution, which is strictly enforced,” spokeswoman Vanessa Menkes said.

Allegations of underage drinking, drug use and prostitution are all part of the underground reputation of popular, big-city nightclubs — though former employees say Prive is unusual, even in the liberal nightclub world, because management cultivated such behavior.

Gaming regulators say other clubs are under investigation, and that action against Prive was taken because the investigation was quickly concluded.

Jerry Markling, the chief of enforcement for the Nevada Gaming Control Board, said other casinos have tightened their nightclub operations after being advised by the board of relatively minor infractions.

The volume and severity of violations at Prive justified the complaint against Planet Hollywood, said Randy Sayre, one of three members of the board.

Even though nightclubs, restaurants and other leased venues inside casinos don’t offer gambling, the Control Board has the authority to regulate activities there because of a broad mandate to enforce the legitimacy and reputation of the gaming industry.

Planet Hollywood, which received industrywide warning letters the board sent to Nevada casinos, had ample time and opportunity to tighten oversight but failed to do so, Sayre said. Only after receiving the specific complaint about Prive did the casino assert control over the club, he said.

At a Nevada Gaming Commission meeting Thursday to approve the fine against Planet Hollywood, none other than the casino’s gaming attorney, Frank Schreck, called the casino a “poster child” for lax oversight.

Las Vegas nightclub operators say nightly vigilance is needed to prevent illegal acts that might otherwise be inevitable. Rather than cracking down on illegal activity, Prive management condoned such actions, competitors say, and was known for “running a loose ship,” as another nightclub operator put it.

Some nightclub contracts call for a casino to sever a lease with a club that jeopardizes its gaming license, Markling said. Other contracts are silent or vague on that point — a sign, Markling says, that the properties don’t want to know about, or be liable for, the actions in their clubs. Planet Hollywood, he said, retained the right to oust Prive as a tenant but chose not to do so.

Many incidents in the complaint were noted by hotel security, which lacked the authority to police the club, Schreck told regulators last week.

The club’s lease, according to regulators, prevented hotel security from entering without an escort.

The property has reworked the lease to allow hotel security to enter the club at any time, Schreck said. Hotel security will train club security, which will adopt the hotel’s “standard operating procedures” on handling customers with sensitivity, he added.

The hotel has adopted the same approach with all of its leased venues, he said.

Planet Hollywood has given no indication it intends to boot Prive management. Instead, the club is filing an appeal with the county in the hopes of reopening soon.

This concerns some of the club’s owners, who say they were caught unawares by the complaint and believe a rewritten lease will do little to stamp out the illegal acts that occurred under the eyes of club managers.

But gaming regulators — accustomed to casinos that act quickly by firing or demoting employees who attract unwanted attention from the Gaming Control Board — think their actions are having the desired effect.

“There’s been a philosophical shift because we’re holding a landlord responsible for the actions of a tenant — something we hadn’t done before,” Gaming Commission member Dr. Tony Alamo said after Thursday’s vote. “I think the industry has received the message.”

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