It’s not so much that casino operators fear the tax man as it is they have a very healthy respect for him. So when the IRS raided the offices of Pure Management Group in February, the industry was watching.

Pure Management operates a number of nightclubs in Las Vegas casinos, most notably Pure in Caesars Palace and LAX at Luxor. The IRS is investigating what happens with the large amounts of cash that exchanges hands in the clubs.

Partiers pay doormen to cut to the front of the line, they tip hosts for better tables and they tip cocktail waitresses on $400 bottles of booze. The IRS doesn’t think all of that money is being reported.

The governmental agency carted off more than 15 boxes of material after the raid on Pure’s offices, including computers as part of the investigation.

“There is definitely some general nervousness now,” said Bryan Ross, a teacher of nightclub management courses at the University of Nevada-Las Vegas. “It is a cash-driven city and any time the IRS gets involved, people are going to get nervous.”

Harrah’s Entertainment, which owns Caesars Palace, and MGM Mirage, owner of Luxor, have good reason to be concerned. As Jerry Markling, chief of the Nevada Gaming Control Board’s enforcement division noted, casinos are “responsible for the activities that take place on their properties.”

At this early stage in the investigation, there is nothing more than the operators can do but watch.

“The IRS and the Department of Treasury raiding the offices of one of our partners is not something we take lightly,” said Alan Feldman, a senior vice president for MGM Mirage. “This is a circumstance where the responsible thing to do is to monitor things very closely.

“We should not need to remind any one of our partners about our expectations of them and their compliance with all rules and regulations.”

By Casino Connection Staff