Las Vegas Sun

September 1, 2014

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Long, hot summer for regulators of Las Vegas party scene

Seven New Pools for Summer

Seven new pool complexes are opening at resorts across Las Vegas to get ready for the summer - and in hopes of making money on the blossoming day life scene. With the flurry of new 21+ pools and pools that charge a pricey cover for parties, the day life scene is helping clubs during a down economy.

This summer may yield the biggest party season in Las Vegas history, with seven new or expanded pools, some with full-blown nightclubs, poised to offer visitors more excuses to drop inhibitions along with hundreds, if not thousands of dollars, on entry and amenities.

It’s also the second summer such clubs have come to the increasing attention of the Nevada Gaming Control Board. Monitoring nightclubs — and the new dayclubs with party pools — is a growing concern for regulators, who in July fined Planet Hollywood $750,000 for allowing illegal acts in its now-shuttered Prive nightclub.

The booming 24-hour party scene — a high-profit business dominated by nightclub operators in Las Vegas — has yielded a bumper crop of illicit activities that are an inevitable part of the mega-club industry worldwide. The question is how effectively Nevada regulators can stay on top of the problem.

“We know there’s going to be drug sales and prostitution and that you can’t stop all of it,” said Jerry Markling, chief of the Gaming Control Board’s enforcement division. The Control Board won’t fine a casino based on a single patron’s solicitation of drugs or prostitution, and is more concerned with rampant illegal acts or those that involve a club’s employees, Markling said.

The Control Board traditionally errs on the side of caution when pursuing disciplinary action against casinos, and will frequently urge them — behind the scenes — to change course rather than hit a property with a surprise complaint. Regulators argue that this cooperative, rather than combative, approach to regulating the state’s economic engine is a more efficient and effective way to force change. As an example, regulators gave Planet Hollywood the opportunity to resolve its well-documented problems before filing a public complaint as a last resort.

Though there haven’t been any nightclub complaints since then, regulators have uncovered problems at other clubs resulting in disciplinary action against casinos that operate them or lease space to operators. Regulators won’t identify the companies involved, though they say the problems — of the criminal kind that surfaced in the Planet Hollywood complaint — have been widespread in Las Vegas.

Over the past year, the Control Board has issued warning letters and follow-up directives for operators to clean up their acts. The confidential correspondence has resulted in a crackdown on illegal acts without unwanted publicity for the companies. For the most part, regulators said, these club operators are making an effort to stay on the right side of the law. The acts at issue weren’t as egregious as the rampant, management-condoned activities going on at Prive, they added.

Control Board member Randall Sayre, who leads meetings with nightclub operators, said many operators have begun taking responsibility for blatantly illegal activities in their clubs rather than turning a blind eye.

Some operators, he said, have not been so forthcoming. That’s despite numerous warnings, public seminars and private sit-down meetings to explain that Nevada casino license holders are liable for the actions in venues they don’t own or operate.

That there’s competitive pressure to create an atmosphere deserving of Las Vegas’ reputation as an escapist party town might not be much of a revelation. What’s more surprising, regulators said, is the notion that casinos thought they had mitigated some of the liability involved in offering such clubs by hiring third-party operators. (According to the Planet Hollywood complaint, the resort knew of problems inside the nightclub but didn’t intervene because the nightclub’s lease prevented it.)

Some companies are operating with the understanding that they are going to allow illegal acts “until they get caught,” Sayre said.

Companies may well take that chance knowing that the Control Board lacks the resources to pursue many in-depth investigations. The agency also lacks the inclination to shut down casinos for any number of transgressions, thus harming the livelihoods of thousands of Nevadans, nor can it close nightclubs that lack a gaming license. (That power rests with the county, which issues liquor licenses and has its own set of laws governing businesses.)

With help from Metro Police, the Control Board might only pursue two major undercover investigations a year, Markling said.

“We only have so many dollars and so many people to do these investigations,” he said.

Given that some operators aren’t proactively policing their premises despite frequent warnings, the Planet Hollywood complaint likely won’t be the last, regulators said.

“To say you care and then ignore (the law) indicates a willingness to play Russian roulette with your business,” Sayre said.

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