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In Vegas: Strip Club Kickbacks to Cabbies; He Who Greases the Palm Gets the Customers

Las Vegas- [Las Vegas]- Times are tough for Las Vegas taxi drivers. Tourism is down, as are their tips, so they do what they must to survive.

No one wants to see drivers hurt, but nightclub owners have long complained that the drivers are using mafia style tactics, pay up or else, like a protection racket. A lawsuit filed on behalf of one company is something the entire industry is probably rooting for.

Outside a downtown hotel, TV producer Ian Russell hails a taxi, and during the drive to the Strip, asks the driver about kickbacks paid by adult nightclubs.

“When we take a person to the strip club, say like four guys right, the strip club will pay us $50 a person to drop them off. It doesn’t matter where,” said the cabbie.

But it does matter to the drivers. Clubs that don’t pay, or pay less than what others shell out, don’t get the cabs. It’s been this way for years in Las Vegas.

Club owners say it’s extortion, pay or else, but they keep on paying and are mostly reluctant to openly criticize the drivers, who, as we learned over and over, aren’t shy at all.

“How much is it to get in anyway?” asked Russell.

“$30,” said the cabbie.

“$30 to get in?” said Russell.

“Yeah, and then the taxi is free,” said the cabbie.

“Yeah? Why is the cab free?” asked Russell.

“They pay me. That’s why I go get you. They pay me double, you know,” said the cabbie.

It’s one thing for a club to hand out cash or freebies as a thank you, it’s another for drivers to demand it. Recently, one club owner hired a team or private investigators to see if drivers would divert customers to someplace that pays better. Hundreds of cab rides were taken.

The faux customers asked to be taken to Little Darlings or Deja Vu, both owned by the same company. Yet again and again, the drivers made up stories about why the passengers needed to go somewhere else.

“They say our girls are old fat ugly. That they’ve got bullet holes. They make up all kinds of stories — that the place is closed, burned down. They say, ‘Take us to Déjà vu,’ and are diverted to another club a half mile away and are dropped off, saying, ‘This is as close as I can get you,'” said Larry.

Deja Vu still pays drivers $20 per passenger delivered, but that’s less than the $50 to $70 some of the larger clubs pay. Most of the clubs say they are struggling to stay in the black and that the money they pay the drivers represents their profit.

How much is it? For the first time, club executives have shared the information with someone outside the business. According to industry sources, these are amounts paid out, on average by the nine largest gentlemen’s clubs over the past year. The amount ranges from a high of $600,000 a month by the largest clubs down to $100,000 a month for the smaller venues, on average.

The nine clubs say they pay a total of nearly $3.5 million a month, every month. It’s all paid in cash and, for the most part, goes unreported. It not only is a drain on the businesses, but also on tourists at a time when visitor volume is way down.

“It hurts the tourists. It’s costing the tourists money,” said Larry.

Deja Vu runs an ad in select hotels to let potential customers know how things work here. The clubs that paid for the ad know they are risking the wrath of cab and limo drivers. They’ve seen it before.

For years, the kickbacks were deemed illegal, but then were brought back. Drivers have always said the system is not extortion, but when there was talk of enforcing the anti-kickback law, the drivers staged a massive slowdown on the Strip and threatened to shut down the airport.

Drivers say the money is rightfully theirs.

“How come they do this to us, you know? That is money out of our pockets,” said driver Tony Chong.

But attorney Neil Beller wonders why strip clubs should be forced to pay.

Based in part on the undercover investigation by private eyes, Beller put together a massive lawsuit, one that names 12 of the largest adult clubs in town — the clubs that pay the most money.

Beller argues that what the clubs are doing is still illegal, “Effectively you are prohibited from giving a gratuity, if you will, giving money to cab drivers for diverting money to the other clubs.”

Beller says he has ample proof that diversion is the norm, not an exception. He also thinks the clubs he is suing are probably hoping the lawsuit succeeds so they can all stop paying a bounty.

“The bottom line is, it just needs to stop,” said Larry.

The drivers insist they are not practicing extortion, but if you try to stop the kickbacks, they threaten to shut down the whole town.

It kind of sounds like extortion, and some drivers have resorted to outrageous tactics. Tomorrow at 5, we’ll tell you a few of those stories. Plus we will put the Taxicab Authority on the spot to hear why they don’t even try to enforce existing laws. And we’ll report on the players who are the absolute villains in this tale, according to the drivers and the clubs.


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