The Nevada state gambling regulator declared that they will start checking all the business connections between casinos and their nightclub associates after the Internal Revenue Service started an investigation at two popular Las Vegas nightclubs. In Las Vegas some hotels and casinos manage their own nightclubs and bars, other hotels rent their space to club operators.

IRS intervened Pure nightclub in February and confiscated several computers. IRS agents interviewed the LAX club staff about tips after a report showing that admission fees and tips received from customers were not properly reported. Both clubs have reported to have revenue-sharing agreements with the hotels. Both agreements require the clubs to do business according to the state gambling regulations. The agreements also allow Harrah’s to terminate the contracts if the conditions are not fulfilled.

"We're going to look at all aspects of those relationships. We want to make sure the relationships are in the best interests of gaming and the tourists." said Jerry Markling, chief of enforcement at the Nevada Gaming Control Board.

Markling said the Nevada state gambling regulator notified the hotels informing them that can be held responsible for the faults of their clubs, and are reviewing revenue-sharing agreements between clubs and the Las Vegas hotels.