State may license Vegas club operators to stop drug, prostitution problems

CARSON CITY — Key employees at swanky nightclubs in casino resorts in Nevada would be required to register with state gambling regulators under a bill designed to prevent unsavory workers from club-hopping and taking trouble with them.

Senate Bill 38, already approved by the state Senate, was heard Monday by the Assembly Judiciary Committee. It was one of a handful of gaming-related bills considered by the panel.

“I think the intent here is to provide some kind of coverage for casino operators,” said A.G. Burnett, chairman of the Nevada Gaming Control Board. “At the end of the day, the licensed establishment is at risk. The idea here is to provide a mechanism where a key employee, nightclub employee, can be kicked out of the system.”

Nightclubs in mega-resorts on the Strip are independent from the gambling side of things. As such, key employees are not subject to suitability findings by state regulators.

But in recent years some nightclub employees have been wrapped up in charges or investigations involving drugs or prostitution.

“The intent is to make sure they don’t pop up someplace else,” Burnett said.

In 2013, the Nevada Gaming Commission fined the Palms $1 million to settle a 17-count complaint involving drug and prostitution accusations following an undercover investigation.

“These clubs and pools are a good thing,” Commissioner Dr. Tony Alamo said at the time. “Somewhere along the way it looks like we are losing control. It’s not a proud moment for the Palms.”

Two years earlier, the Hard Rock Hotel was fined $650,000 to settle similar charges.

SB38 requires the Nevada Gaming Commission to adopt regulations overseeing key employees of “club venues” including nightclubs and poolside parties located on casino properties. Employees subject to registration would include anyone who provides VIP and hosting services or anyone else deemed essential by the commission.

Russell Rowe, a lobbyist for Hakkasan, an international restaurant and nightclub operator with several venues in Las Vegas, supported the bill. Rowe said seven of the world’s top 10 nightclub destinations are in Las Vegas.

He said it’s important to ensure that “unwanted elements” do not undermine the nightlife industry.

No action was taken by the judiciary committee, which also heard Senate Bill 443, which would allow private entity groups to form and place huge bets at Nevada sports books.

A similar proposed died in the 2013 session, but Burnett said the current bill tightens controls to guard against money laundering and to protect the integrity of Nevada’s sports betting.

SB443 allow a business entity to register with state gambling regulators and place big bets on football, basketball, boxing and other sporting action.

Under existing law only individuals can place wagers at Nevada sports books.

Supporters of the bill say allowing entity wagers would permit Nevada, which has a monopoly on sports betting under federal law, to capture some of the estimated $380 billion bet illegally on sports each year in the United States.

Detailed information on each owner, director, officer manager and anyone entitled to payments would have to be submitted, but it would be up to each sports book whether to accept wagers from those registered “accounts.” Entities also would be required to have bank accounts in Nevada.

Backers of the bill have said such entities would operate as a kind of sports betting mutual fund. Investors would pony up money but not dictate what kind of bet they want to place. Instead that would be up to the entity managers. Investors would then share the winnings — or the losses.

The committee took no immediate action the bill.

Contact Sandra Chereb at schereb@reviewjournal.com or 775-687-3901. Find her on Twitter: @SandraChereb