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February 12, 2012

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Gaming column:

The party’s over for out-of-control nightclubs, regulator says

By Richard N. Velotta (contact)

Fri, Sep 25, 2009 (3 a.m.)

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Prive at Planet Hollywood

The Prive nightclub at Planet Hollywood. Launch slideshow »

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It’s quite an electric scene, those casino nightclubs.

After 10 p.m. on weekends, they are usually packed with attractive people, many in daring attire. Some areas within the clubs are really dark, while some have blinding lights.

The music is loud and pulsating, and the interaction is free and easy.

And the booze is everywhere.

You can get a flavor for the vibe from the hundreds of photos posted on various Web sites.

But in their quest to have a wild time in Vegas, some clubbers misbehaved. And, in their bid to be recognized as the hippest place in town, club managers looked the other way.

There were documented cases of underage drinking, drug use and people having sex in public. Although some view the misbehavior as an average night of fun and the personification of “what happens here, stays here,” gaming regulators didn’t see things that way.

Because regulators are concerned about the reputation of the gaming industry and require that companies licensed to run casinos comply with federal, state and local laws, they have taken notice of what’s going on in the clubs.

When state Gaming Control Board member Randall Sayre sits face to face with casino executives and gaming-license applicants, you’ll usually see him in a three-piece suit, and he’s all business.

When he gave a presentation and answered regulatory questions in a three-hour industry meeting last week, he looked much more comfortable in a two-tone sports shirt. But he was still all business.

Sayre was thorough and insightful as he went through a long list of concerns. At times he was funny, but he also reminded the more than 250 people at Cashman Center that he and his colleagues hold the hammer — the ability to discipline those who run afoul of gaming regulations with fines or even license revocation.

But, Sayre said in so many words, he doesn’t want to do that. In fact, he sees licensees as partners running the gaming machine that draws millions of people to Nevada.

Sometimes licensees run afoul of regulations or federal, state and local laws. When they do, the Control Board gets involved. Education is the best way to head off regulatory action, and that is what last week’s meeting and a similar session in Northern Nevada this week were all about.

Sayre said he wasn’t going to name names, but eventually he did anyway, calling out Planet Hollywood and Prive nightclub as the most recent examples of how things can go wrong.

In July the Nevada Gaming Commission ordered Planet Hollywood’s owners to pay a $500,000 fine for its lax oversight of illegal activities at Prive.

The fine, one of the largest imposed by the commission in recent years, includes a clause that orders Planet Hollywood to pay an additional $250,000 if the Control Board files any similar complaints through July 31.

The Control Board filed a nine-count complaint outlining several “incidences of excessive inebriation, drug distribution and abuse, violence, the involvement of minors and the handling of those individuals who became incapacitated while at the club.”

The complaint said some people had to be hospitalized for overconsumption of alcoholic beverages; some patrons were under the influence of controlled substances; some were physically or sexually assaulted; and the Clark County Business Licensing Department issued Prive citations for topless and lewd activity.

The complaint also noted statistical increases in calls by Metro Police to the property in the time the nightclub opened for a variety of police actions and increased incidences of prostitution.

When Sayre addressed his audience of casinos employees, most of them there to hear what he had to say about the nightclubs, he encouraged those in attendance to ask questions without identifying themselves or the properties they represented.

One result from the meeting was that there aren’t going to be any more warning letters. The Control Board expects the industry to understand and abide by the rules.

It expects the properties to know that even though a nightclub may be independently owned and managed by a third party that the licensee is on the hook for compliance to the rules.

That means the licensee needs to know what’s going on in the club and have access to it.

That was one of the problems in the Planet Hollywood-Prive arrangement. Although the Opium Group ran the club, the casino’s management didn’t have the access it needed to monitor club activities.

One aspect of oversight that Control Board agents would be watching is whether licensees have a plan in place to handle problems when they occur, he said.

Sayre said he knows bad behavior is going to occur once in awhile. That’s the nature of people looking to have a good time in Las Vegas.

But how the licensees react will be key. Do they respond responsibly when someone gets out of control? Do they have security in place to handle large crowds? Or, will they ignore the problem or handle it improperly?

Sayre said Control Board members aren’t imposing their moral standards on the industry. They are enforcing laws that already are on the books, whether they are liquor laws, public decency statutes or underage drinking.

“I take no great pride in taking action against a Nevada licensee,” Sayre told the group. “But in the absence of people taking responsibility for their own stuff, I have the tools to effectuate change.”

Value of business travel

The U.S. Travel Association recently commissioned Oxford Economics USA to prepare a report on the value of business travel. The results in “The Return on Investment of U.S. Business Travel” should be of interest to anyone associated with the struggling meetings and convention industry.

In 2007 Nevada was the sixth most-dependent state on business travel and had a 4.3 percent share among the 50 states and the District of Columbia. Business travel spending was estimated at $10.5 million and Nevada fell behind California, Texas, New York, Florida and Illinois.

The share was even higher for meetings-and-events travel where Nevada was third in the nation with an 8.8 percent share and estimated spending of $8.9 million. Nevada trailed California and Texas in that category.

Adam Sacks, founder and managing director of Oxford Economics’ Tourism Economics division, said in a conference call last week that every dollar invested in business travel yields $12.50 in incremental revenue for companies.

Oxford conducted 300 interviews with executives May 4-8 and solicited 500 online surveys from business travelers for the study.

Some of the findings:

• It would take years for a company to catch up in profitability if business travel is eliminated for a year. The study said the average business would see profits fall 17 percent, and it would take three years to recover.

• Both executives and travelers estimated that 28 percent of their existing business would be lost without in-person meetings.

• Both estimated that about 40 percent of prospective customers become new customers with an in-person meeting compared with 16 percent without a meeting.

• More than half of the travelers said 5 percent to 20 percent of their new customers were the result of participating in trade shows.

• Incentive travel — the rewards top performers get for doing a good job — is more valuable than a raise. Executives said to achieve the same effect of incentive travel, an employee’s base salary would have to be increased by 8.5 percent.

• Increasing government travel spending by $1 million wold increase productivity from $4.6 million to $6.3 million.

The entire 50-page study is available online at meetingsmeanbusiness.com/value-meetings.

Richard N. Velotta covers tourism, technology and small business for In Business Las Vegas and its sister publication, the Las Vegas Sun. He can be reached at 259-4061 or at rick.velotta@lasvegassun.com.

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