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December 1, 2022

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Daily Memo: Gaming:

Big fine establishes hard line on nightclubs

Regulators take a tougher stance against Planet Hollywood than in past


Sun file photo

The Prive nightclub at Planet Hollywood.

Prive at Planet Hollywood

The Prive nightclub at Planet Hollywood. Launch slideshow »

Map of Planet Hollywood Resort and Casino

Planet Hollywood Resort and Casino

3667 S. Las Vegas Blvd., Las Vegas

When posh nightclubs became a big profit center for casinos a few years ago, many wondered how far gaming regulators would go to police activity inside the clubs — where a combustible mix of free-flowing booze and scantily clad patrons and employees create potential, even inevitable, problems.

Regulators have a broad mandate to impose fines and revoke the licenses of casinos whose activities are “inimical to the public health, safety, morals, good order and general welfare” or bring “discredit” to the state or gaming industry.

The July 9 Gaming Control Board complaint against Planet Hollywood answers that question.

It must pay a $500,000 fine to settle claims that it knew or should have known about illegal acts — prostitution, drug use, underage drinking and assault — in the Prive nightclub. After the casino admitted to the acts as part of the settlement, the county denied the club a permanent liquor license, forcing it to shut down last week.

Regulators had encouraged compliance with warning letters. One sent by the Control Board in April stated that casinos are responsible for the activities in their leased venues and warned of disciplinary action. In the case of Planet Hollywood, warnings didn’t help.

Regulators have taken a laissez-faire approach to industry-shifting financial moves affecting thousands of Nevadans, including billions in debt accumulated to take companies private, mergers that consolidated power in two Strip companies and controversial tip-pooling practices.

Regulators must act when confronted with illegal activities. And yet, they have been reluctant to revoke licenses for anything but mob-like chicanery, such as refusing to obtain a license or rigging games.

Former regulators say sex and drugs aren’t sins on the level of cheating the state or gambling patrons, which go to the heart of regulators’ role: Protecting the integrity of the gambling enterprise.

After the Nevada Gaming Commission voted to approve the penalty against Planet Hollywood on Thursday, Chairman Peter Bernhard said it’s difficult to make generalizations about the panel’s decisions.

“It’s a process of progressive discipline,” he said. “We see if there’s repeated conduct and whether it gets corrected.”

That may explain the Control Board fine of $50,000 against Snick’s Place, a downtown slot bar that agreed to pay the fine in March for allowing sex acts. Regulators also suspended the bar’s gaming license for six months.

According to the Snick’s complaint, on one occasion a bartender helped disrobe a customer, who then crawled over to another naked customer to engage in a sex act.

Bernhard said that when levying fines, regulators take into consideration the size of the business. Planet Hollywood’s fine would have put a small bar like Snick’s out of business, he said.

Most commissioners said the Planet Hollywood fine was significant enough to force corrective action and get the attention of other casinos with nightclubs.

High-energy clubs are good for tourism but Planet Hollywood crossed the line when it “sacrificed” the health and safety of its customers, commission member Dr. Tony Alamo said before casting his vote Thursday.

Commission member John Moran Jr. suggested that fines of this sort should be “significantly higher” now that casinos are on notice.

(Under previous ownership, the Hard Rock Hotel in 2002 agreed to pay $100,000 for allowing nightclub patrons to have sex in “private” booths visible from the dance floor.)

Tame bars and clubs are bad for business. That’s why some casinos have taken a relatively hands-off approach to their nightclubs, compared with the heavy surveillance in gambling and retail areas.

Whether operators test regulators’ resolve is yet to be seen.

If the county doesn’t shut down their clubs, casinos likely will emerge with gaming licenses intact — though significantly poorer at a time when money is tight.

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