Paul Szydelko
Paul Szydelko

After more than a year in development and only seven months of operation, the Kaos nightclub and day club at the Palms Casino-Resort in Las Vegas closed abruptly on Nov. 5.

The massive venue, spanning 100,000 square feet, was the centerpiece of the Palms' recently completed $690 million renovation. A reported two-year $60 million contract with DJ Marshmello symbolized the Palms' plans to go all-in on the venue.

J Balvin, G-Eazy, Cardi B and others opened Kaos in April. In addition to Marshmello's exclusive arrangement, other well-known DJs such as Kaskade and Deadmau5 appeared.

"We're setting ourselves up nicely to be the nightlife leader in Las Vegas," Palms general manager Jon Gray said.

The club paused in mid-September to build a temporary dome intended to extend the pool party season into the fall and winter. It reopened Oct. 31 with Cardi B performing.

But there were signs the Palms overplayed its hand. With a split negotiated with Marshmello and Gray out as general manager by Oct. 1, the end came just five days after the reopening.

"While Palms has experienced exceptional growth across both the gaming and nongaming segments of the business, the expense side of the business has been challenging to date, due in large part to the entertainment and fixed-cost structure associated with Kaos," said Michael Britt, senior vice president of government relations and corporate communications at Red Rock Resorts, owners of the Palms, announcing the closure.

As Palms officials consider how to move forward with the space, it will continue to be used for special events and as a pool area for hotel guests.

"For it to abruptly close the way it did was pretty surprising," said Anthony Curtis, a longtime Las Vegas industry observer and president of LasVegasAdvisor.com.

The Palms opened in 2001 a little more than one mile west of the Las Vegas Strip and quickly became the go-to spot for a youthful demographic. However, it lagged as a nightclub spot for more than a decade as the nightclub industry was burgeoning on the Strip, Curtis said. The clubs are known for multiple rooms, cutting-edge sound systems, extravagant light displays, high-profile DJs, celebrity appearances and VIP table service.

"In a micro sense, it's difficult to get a foothold as one of these kinds of places if you're not dead center on the Strip.  It was very difficult for them to get back into the race after they had fallen so far behind," Curtis said.

"From a macro point of view, a lot of people are saying, and I don't think this is necessarily so yet, but it might signal a changing of the guard in terms of what people are looking for in entertainment," Curtis said. "The megaclubs have enjoyed an unbelievable run, two decades or more, of being the king for nightlife."

Noting the closures of Hyde at the Bellagio and Intrigue at the Wynn/Encore earlier this year, Curtis said larger clubs may have tougher sledding. More intimate spots such as Apex Rooftop Bar & Lounge and Camden Cocktail Lounge at the Palms; the Barbershop Cuts & Cocktails at the Cosmopolitan on the Strip; and even venues such as Top Golf just east of the Strip may be trend.

"From that point of view, it may be that these big clubs have had their day, and they are a little bit on the decline. That remains to be seen," Curtis said.

The demographic that made huge nightclubs money-making machines for Strip resorts is aging, Curtis said, drawing a parallel with the live-poker craze that swept Las Vegas and has now receded. Those in their 20s and early 30s who used to win the poker tournaments or run to the clubs are now in their late 30s and 40s and looking for a different kind of experience, he said.

He noted that the typical nightclub-goer at the height of the trend wasn't ideal for casinos or restaurants. "They spend a lot of the money in the club. They probably spent a lot of money on their room, he said. "But other than that, they weren't particularly gamblers. I don't think food was a big deal to them. Those guys would probably go to Burger King and then go drink a $2,000 bottle of Champagne."

How Red Rock Resorts reimagines the space to continue the momentum of the Palms' many well-received renovations will be interesting to watch.

"They are incredibly good at what they do," Curtis said. "The Palms is a beautiful, fantastic place with what they've done to it. The restaurants there are amazing. The other clubs are terrific. They can compete on a (certain) level, but it's very difficult to be a Strip casino if you're not on the Strip."

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