Mandalay Bay Will Pay Half-Million Dollars After Drug, Prostitute Bust

LAS VEGAS (Associated Press) - The Mandalay Bay Resort plans to pay a half-million-dollar fine after employees at an upscale Las Vegas Strip lounge provided prostitutes and drugs to undercover officers.

The Nevada Gaming Control Board filed a proposed settlement with the casino this week. It’s awaiting approval by the Nevada Gaming Commission.

Authorities say undercover officers bought cocaine, ecstasy and other drugs from employees of the House of Blues Foundation Room over the summer of 2012. Officials say employees also connected officers with four prostitutes and a private room for sex. The sting caught 10 employees and five non-employees engaging in this kind of illegal activity.

Two have been arrested, according to Gaming Control Board Enforcement Chief Karl Bennison, and more arrests may be in the works. The arrests were delayed to avoid disruption to the operation.

“You’re trying to see how far up the management chain things are being directed,” Bennison said.

Officials with Mandalay Bay parent company MGM Resorts do not contest the findings of the complaint. The company said the employees involved in the activities have been fired, and the lounge has increased its training procedures to prevent future misconduct.

“While these activities took place outside our knowledge, we acknowledge our responsibility, as landlords, to monitor all nightclub and ultra-lounge operators at our resorts. The intolerable activities discovered by investigators are obviously completely contrary to the type of luxury resort our company strives to run,” the company said in a statement. “House of Blues has increased its compliance and training procedures and reemphasized its zero tolerance for inappropriate conduct.”

Mandalay Bay will also pay $17,000 to reimburse investigative expenses.

The Foundation Room is a chic restaurant and club on the 43rd floor of Mandalay Bay, which is on the Las Vegas Strip.

The complaint says that the investigation was initiated after an undercover officer bought cocaine from a person later determined to be a Foundation Room host. The officer asked the host if he could use the drug at the club and was told he could, if he was careful.

Most of the transactions that occurred during the sting took place in public areas in the casino.

State gambling regulators partnered with local police to conduct a similar sting in 2012 at the Palms Casino Resort west of the Las Vegas Strip. In that case, nightclub employees accepted payments to supply prostitutes, cocaine and pain pills

Last spring, gambling regulators sent a letter to all casinos warning them to curb illegal activity at clubs and pool parties.

“It’s a constant issue and concern, Bennison said.