Nightclubs exploded in Vegas only over the last five years, and their reign may be coming to a sudden end. At their best, the clubs were largely responsible for finally making Vegas cool again, and for bringing the young and the wealthy and even famous trendsetter types from Los Angeles, a crowd Vegas long coveted as next generation customers. Often the celebrities were compensated for their visits, but it worked. Vegas has totally escaped a reputation as an older generation's idea of fun. The nightclubs had a lot to do with that happening for this town.

But what originally made casinos so nervous about getting into the nightclub business was the industry's roots in rave culture with its drugs and casual nudity and other wildness associated with any underground scene. That changed when Light Group (starting at Bellagio with the club Light, now named Bank) used expensive bottle service in exchange for a table thus selling the real estate more than the liquor, and other clubs began paying celebrity hosts shortly thereafter. These tactics changed the club culture in ways that allowed casinos to cut off the scene from its underground roots sufficiently by focusing only on the high-end customers.

Instead of earning money off angel headed hipsters, nightclubs became a crucial luxury experience for well-to-do people in their 20s and 30s. And, best of all for the clubs, a status quest broke out for expensive club real estate in the various gradations of VIP sections quickly built to reflect different astronomical sums.

Then there was the high pressure "take care of my buddy" tipping culture that resulted in incredible amounts of cash moving through nightclubs. At first, casinos perhaps were not prepared for the money aspect of the club's sudden success as they were more focused on initial concerns about ecstasy and prostitution (well-founded concerns those too it turns out). But also the casinos seemed to demonstrate a willful desire to not know what was going on in their nightclubs.

Most of the successful clubs were tenants renting space from the resorts. And, as the clubs were bringing huge numbers of people into the casinos, the resort companies, in general, asked far too few questions for far too long.  All of this began to change when the IRS raided Pure back in 2008, the first time the IRS had sent agents in such a fashion into a casino since the days of the mob. That investigation is apparently still ongoing. And on Thursday, in a one-two punch, Planet Hollywood agreed to pay a $500,000 fine because of its admitted lax oversight of alleged yet non-specified behavior at tenant nightclub Prive. This was followed by the nightclub being denied a liquor license which, without a successful appeal, will almost certainly mean Prive's closure. I have put in a call to the company that owns Prive (Opium Group) and am waiting to hear back.

Prive was a late arrival to the nightclub scene and employed veterans and practices not too dissimilar from other nightclubs in other resorts. It is unlikely Prive was a maverick club that had incidents worse than all other clubs. At least, Prive never stood out particularly among the more extreme incidents I personally witnessed at nightclubs. And, I am not alone in expecting that soon other clubs will join Prive by bringing substantial punishments down on host casinos from gaming authorities. Not speaking to the merits of Prive, specifically, this oversight is long past due.

I have personally witnessed people at various nightclubs (though not Prive), allowed inside without showing any identification. In one case, I know an admitted person was only 20. To do this sort of thing, which was not uncommon, back in the days of 2007, you slipped a doorman money and then people got admitted without any proof of age. I have also seen visibly intoxicated patrons served more alcohol. And, the less coherent the customer the more I watched as they were badgered for tips. One example: People were asked to tip security to guard a walk to a bathroom and back. So many tourists complained to me about the sleazy and endless ways nightclub hosts hit them up for cash and other hidden tips beyond what they were told things would cost. And everyone I spoke to said the same thing -- complaints to casinos about the behavior of the nightclubs were met with one response: The club is not our problem, we are just the landlord. When I called Caesars once over an incident I had heard about at Pure, that was the response I got as well. The gaming authorities with this recent action against Planet Hollywood over Prive are sending a strong message that this is not the case. 

I have already heard from nightclub insiders that celebrity hosting fees have dropped from the not uncommon six figures of 2007 to in some cases a few thousand dollars and some comps. And, as a result, the A-list crowd may be making fewer appearances at Vegas clubs than in the past. When was the last time Paris Hilton hosted at a Vegas club? Can Vegas no longer afford her?

One thing is for sure, the degree of scrutiny that nightclubs in casinos face has changed dramatically at the very moment that the recession is hurting them most.

Photo: Sarah Gerke

The Las Vegas Sun has one of those stories you hear a lot but only in anecdotes. In this instance, an intoxicated casino nightclub patron at Tao inside the Venetian (but you can insert most any major casino nightclub in the anecdotal versions) paid thousands of dollars for a skybox for his 32nd birthday. After allegedly being hassled for tips by club security far beyond what anyone would consider reasonable, he claims he was beaten by security staff, who took about $300 in cash from his wallet, and then was turned over to casino security, who handcuffed him. He said he insisted they call police but that Venetian security resisted.

In this case, when police were finally summoned, the officer who arrived assumed the man was a criminal, as shown on a security video. "You’re the one in cuffs — you’re the criminal," the officer says. Shouldn't police have known that a private corporation put those handcuffs on this man? Tao denied that their employees took the man's wallet even though the security video showed Venetian security returning his ID to him and saying a manager at Tao had given the ID to them. 

The club denied that security beat the man, Las Vegas resident Jim Morrison, and said that his injuries were caused by a fall. They also refused to comment to the Sun for the story.  But Morrison got a measure of satisfaction when he persuaded a jury to award him around $80,000 over the incident.

All of the elements of this story -- the alleged aggressive tip demands of nightclub security, the apparent close relationship between police and casino security -- are among the most common complaints I hear from tourists whose vacations have gone horribly awry. The only surprise to me in this story is that the club is Tao, which I don't hear as many complaints about for this sort of behavior.

The Tao incident stands out primarily because it went to court instead of being settled or confined to gossip and Web posts on tourist sites.

I am not at all surprised that Morrison was not a typical tourist, but a professional poker player. Professional gamblers can have the most contentious confrontations with resorts, but they also are aware of their rights and capable of taking issues like this to court.

Photo: Sarah Gerke

Early Saturday morning I observed one of the rarest sights I will ever see at a Strip property. I was at Caesars Forum Shops, one of the most trafficked malls in the world, to view a protest.  As private property, most any protest there would usually result in a lot of trespassing arrests. But this protest was different. The protesters were customers and employees of the popular nightclub Poetry that brings a lot of business to the Forum Shops. No one was arrested; casino security observed from a respectful distance.

Actually, in an  e-mail and conversations before the event, organizers and participants had referred to this as a "silent protest." But by the time the march took place, the term had morphed, to quote Poetry nightclub owner, Michael Goodwin, into "silent observance."

Poetry, which is located in the Forum Shops above partner Wolfgang Puck's Chinois, has been involved in a tenant-landlord dispute with Caesars and the landlord of Forum Shops (Simon Property). In addition to organizing the "silent observance," Poetry is suing both Caesars and Simon Property in federal court. Because of this pending litigation, Simon Property through a spokesperson declined to comment to the Buffet. Caesars has not responded to a request for comment sent last week.

At the center of the dispute is the closing of the interior entry from Caesars to Forum Shops. At 1 a.m. a gate is closed that forces patrons of the nightclub to go outside to walk between the casino and club. The result is that spiffily dressed clubgoers must walk through service entrances past doors labeled  for "Emergency" use, then outdoors past piles of trash and dumpsters to get to the high-end nightclub. For locals the geography is not too challenging, but according to owner Michael Goodwin, this obtuse entry process has proven too much for many tourists who can't find a way into the club.

"This used to be a peak hour but now our business goes down at 1 a.m. Tourists see a sign that says the Forum Shops will open tomorrow and it does not even say how to access Poetry."  And Goodwin has no doubt what the motivation is behind the closing of the gate: racism. Poetry has a large number of black patrons, and Goodwin believes race is the reason behind this gate being closed. Hence the non-protest protest as described by Goodwin, a few minutes before he joined the others who marched from the club to observe the gate being closed:

"We are not calling it a protest. We are calling this an observation of racism in action. The fact of the matter is that we feel the harassment we take and the treatment we get here is based on us being embraced largely by a black clientele. Why did they close the door that is our main entrance after 4 years at business?"

Local radio personality Mike P. from Power 88 agrees. He complained while waiting for the gate to shut: "They put a huge wall up to prevent African American people and people who like hip-hop from coming to Poetry. Instead of walking through a nice air-conditioned casino, we have to work through a dirty back alley. Why is there a wall here? Why are minority people forced in through a back alley in 2008?"

So at about 12:45, around 100 club employees and patrons, many holding drinks, all well dressed,  marched past the various boutique stores and other designer offerings in Forum Shops to the casino entrance. The crowd, racially diverse,  waited quietly for the gates to close; in view, a few feet away, customers were feeding banks of slots on Caesar's gaming floor. As the gate slid closed at 1, some of the protesters booed. One woman yelled out, "Where is Obama when you need him?"

Then everyone walked back to the club, past the "Emergency" door, through the service hallway, past the open trash and dumpsters,  into another service hallway, and finally back into Poetry to resume dancing and drinking and hopefully catch a glimpse of the night's porn star host. Maybe a protest isn't how most Vegas club goers get involved but sometimes as the Beastie Boys once said, "You've got to fight for your right to party."

(Photos by Sarah Gerke)

For whatever reason, the bad economy, the IRS investigation into nightclub operator Pure Management Group or just luck, things have been fairly low key of late in the Vegas resort nightclub scene. Even more scaled back in Vegas lately is the penchant for endless sucking up to select tabloid celebrities.

Instead, the Las Vegas club scene has mostly used models not known by their own fame, but unknowns piggybacking on better known titles, like former Playboy Bunny or Miss Nevada.

Also, porn stars like Tera Patrick are becoming more of a regular attraction for hosting. What I have heard is that some clubs are pleased that they can still get big lines without paying the big bucks to have a celebrity host.

Not that there haven't been some serious exceptions. Christina Aguilera, left, paid a highly publicized visit to LAX at Luxor this weekend. But Aguilera is one of the celebrity investors. In fact, when was the last time anyone saw Paris Hilton in Vegas? It has been a while.

But Vegas' Paris Hilton jones is about to get sated Friday, when Miss Hilton returns to Vegas for an advertised appearance at TAO at Venetian.

This is interesting for a couple reasons. First off: in terms of advertised appearances, Hilton has been reasonably loyal to Pure Management Group nightclubs (including PURE at Caesar's and LAX) that reportedly have paid her plenty to party there. On top of that, PMG, in a massive gesture of sucking up, even helped arrange a packed screening of her movie for her to sit through to build her self-esteem (like her self-esteem was a delicate flower that risked extinction). Loyalty means nothing, it seems in the nightclub world. And, this appearance will be especially high profile. Hilton's night at Tao nightclub is in reality a taping of her new reality show "Paris Hilton's My New BFF."

In addition to loyalty, common sense is also not valued in the Vegas nightclub world, at least when compared with promotional acumen. The other celebrity returning to Vegas is another former LAX and PURE regular, lesser-of-two-evils parent  Kevin Federline.

Federline this time, though, will be heading to the increasingly hot Privé at Planet Hollywood. Of course, he has a special incentive. Privé's excuse for Federline hosting there (as if it being Friday the 13th wasn't reason enough) is sure to grab headlines. To quote the press release: "Kevin Federline to be named Father Of The Year at Privé Las Vegas."

Yes, partying Father's Day weekend at a Vegas nightclub is, in the opinion of Privé nightclub in Vegas, the stuff that makes for being selected Father of the Year. I have written to Privé to ask for an interview to answer some basic questions:

• What was the process used to select Kevin Federline as Father Of The Year by Privé?
• Who were the judges?
• And, what in their opinion really placed Federline above all other fathers this year?
• Would one of the judges be available to discuss with me what really impressed him/her about Federline's skills as a parent?"

I'll let you know when I hear back.

(Photo courtesy PMG)

This week has proven the first huge shake-up of the nightclub industry in Vegas since its emergence as the signature business in the new Vegas. Most of the press coverage is going to the dramatic IRS raid yesterday at the offices of Pure Management Group and Pure nightclub at Caesars. Reports have 10 to 20 agents confiscating computers. Pure has issued the following statement: "Pure Management Group is fully cooperating with this IRS investigation and looks forward to a quick and satisfactory resolution. Until that time, we will have no further comment on this matter."

The more under-the-radar story involves the Light Group. Reuters is reporting that Sheikh Hamdan bin Mohammed al-Maktoum of Dubai bought 50% of the company yesterday. I have yet to be able to reach anyone at Light for comment.

The Las Vegas nightclub scene has exploded over the last few years with the kind of growth that even celebrity chef restaurants and high-end retail in Vegas have not equaled. Though these nightclubs reside in casinos, the resorts do not own them.

The nightclubs in Vegas are mostly private companies renting space in a casino. The biggest, Pure Management Group, operates about 10 restaurants, lounges and nightclubs in resorts in Vegas. Light Group, one of the first nightclub companies to arrive in Vegas, operates Bank at the Bellagio and Jet at the Mirage, as well as other properties, with more in the pipeline. In fact, I am talking to one of their publicists later today about a sushi restaurant they plan to open this summer at the Bellagio. Similarly, top nightspot Tao is not owned by the Venetian. And Planet Hollywood does not own Prive.

But since 2000 these nightclubs have been opening at a rate of about 3 to 5 a year and have turned into a largely cash business worth by some estimates in the "hundreds of millions in revenue." No surprise the IRS would pay attention. But the IRS may discover that the numbers may not be what they seem.

Of course, money numbers are a funny thing in Las Vegas. Large numbers are generally believed to impress people. They have a promotional value more than a fact value. I tend not to trust them, and I never take them at face value. The opening of a $40-million nightclub means the next club to open will certainly claim to have invested $50 million.

Then there is the matter of paying a celebrity to host. When Pure was said to have paid Britney Spears to host one New Year's Eve, the published reports on her fee ranged from the low six figures to a few million. The truth is that no one knows the real numbers involved in the nightclub industry beyond that its expansion and presence in resorts bespeak huge success. This is the sort of success in Vegas that usually means hundreds of millions. But no one can be sure of the real number. These are private companies.

And there are plenty of fuzzy edges on numbers even on the front end. How much do you have to bribe -- I mean tip -- a doorman at Pure to get inside? Well, the last time I faced that issue the number being bandied about was $100. But then other people claim the number is $800-$1,000. That seems exaggerated to me, and not something I have ever seen. Tourists will exaggerate how much they were fleeced, and nightclubs like to bump numbers up because it makes people more comfortable spending in that range.

Here is an example: LAX sent me a press release last week with the following: "A customer in the club spotted Paris (Hilton) and, knowing her birthday is this coming weekend, proceeded to purchase four white-gold-plated 3-liter bottles of 1995 Dom Perignon at $40,000 per bottle."

I do not believe that customer really spent $160,000, no matter what the press release says. The bottles may cost that much on the bottle menu, but the customer probably got a substantial discount for buying four. And that is the point with nightclub cash numbers: No one knows except the actual club.

When it comes to nightclubs, the numbers that are out there are nothing but a mix of rumor, conscious promotion by the clubs and glib summaries by the press. No one really knows the full picture. Even nightclubs probably don't know everything, as PMG and Light Group aren't likely to share that kind of information with each other.

I have watched Robert Frey and Steve Davidovici build Pure Management Group starting with Coyote Ugly (and then partner Jennifer Worthington) at New York New York in 2001. They and their team have worked with an extraordinary intensity and speed and savvy to overtake Light and establish Pure as the premier nightclub company in Vegas. This IRS investigation looks to be the most serious challenge the nightclub industry in Vegas has faced. But the business is also a fairly new one here, and I am sure there is plenty of room for disagreement over the arcane details of tax law. I plan to be careful about sensationalizing this, in case it is the IRS that turns out to be blundering. The IRS has a contentious history when it comes to tipped workers in Vegas. As we wait for more information, I am also trying to reach frontline workers and others from Pure to find out how this is affecting them. Expect the Buffet to keep track of this story in the days and weeks ahead.

But with major changes in Light Group's ownership and Pure Management Group being raided by the IRS, it is clear that this week marks the moment when Vegas nightclubs are going to start being under a different sort of spotlight.

(Photo of Fergie at Pure by Sarah Gerke)