Two summers ago, I attended the premiere of Tao Beach’s Sunset Sessions pool party. There, a modern-day wandering minstrel serenaded us with his brass horn. Trumpet player (or, as he prefers, “Vibe Elevator”) Rico DeLargo batted his lashes at each passing lady, romancing her with his tune in time with the DJ. By the pool, cast members of the then-debuting Stomp Out Loud grabbed whatever they could find and started up a drum circle. A reminiscing feeling washed over me, even back then.

“Where have all the live musicians gone?!” I asked a colleague that afternoon. Years before that it was a regular thing to see a trumpet player or cellist entertaining the club crowd, and go-go dancers were as plentiful as palm trees. Back in 2003, one routinely saw a saxophonist, drummer, mime, opera singer or even a stilt-walker busking for Light’s Sunday-night industry party. So where did they all go?!

The answer: Nevada’s live entertainment tax passed in 2003, went into effect on January 1, 2004, and was modified in 2005. By Nevada Gaming Commission and State Gaming Control Board guidelines, gaming venues are required to pay—depending on the property’s gaming license (restricted or non-restricted), number of tables and/or slot machines and occupancy—between 5 and 10 percent casino entertainment tax (from gross receipts) for having live entertainment. Most casinos or gaming companies employ an internal food and beverage auditor, who insures the cooperation of their venues and on-property partners.

According to the Nevada Department of Taxation, non-gaming facilities (including nightclubs) pay 10 percent LET from their gross receipts for having entertainment in venues with between a 200- and 7,499-patron capacity. But this does not mean that CET and LET are collected at all times. Rather, the tax kicks in when live performances commence or when a cover is being charged for the host venue, whichever comes earliest. That’s where things get dicey.

Neither you, the physical club nor the DJ counts as live entertainment. But here are a few things that do: singers, dancers, magicians, actors, acrobats, animals and yes, even circuses. Flair bartenders do not unless they sing, dance or perform acrobatics.

“Unarmed combat,” NASCAR races, and events where all proceeds go to entirely nonprofit organizations are exempt, as are outdoor concerts at non-gaming venues. Fashion shows are taxable, but models coincidentally mingling in high-fashion clothes are not. Karaoke is exempt unless the leader/host is paid and performs. The national anthem is exempt, as are strolling musicians (good news for DeLargo) and private events during which the club is closed to the public if no advertising is done.

And for all the entertainment they provide, the patrons are still exempt.

While live entertainers are not an entirely extinct species, they are an endangered one. You can still catch the odd percussionist here and there. When I check in with DeLargo two years later, he notes a sharp decline in his bookings in Las Vegas, both because of the economy and because of misconceptions of his effect on LET/CET. Says DeLargo, “I work a hell of a lot more out[side] of my home-base city (which is the ‘entertainment capitol of the world’) than within it. Ironic.”

Percussionist Cayce Andrew concedes that his exotic art form “may add something unique to the environment, but is not a requirement. Therefore, as soon as business becomes slow or corners need to be cut, I am usually the first to go.”

The tax now rarely results in an increase in cover or drink prices in clubs, though years ago I ran myself dizzy at the Rio, manually switching over each of Club Rio’s cash registers to reflect tax and no-tax prices between The Scintas, Chippendales and the nightclub.

Time was when you would see “17.5% LET and Nevada State Sales Tax” on bottle menus at every nightclub where live entertainment was plentiful.

Passing the tax on to the customer is certainly one way to avoid the problem; that’s how concert venues generally handle it.

Without naming names, the club reps I spoke with all took the position that an impromptu performance by a celebrity host (technically therefore a guest or patron who happens to be famous) does not count as a live performance, which explains the profound number of fliers touting a “special guest host,” and the like. Advertising plays a big role in this conundrum. A billed act or advertised performance is a surefire way to set the tax into motion. One way to deal with this, says one marketing director, is for the venue to book the entertainment, widely advertise their entertainers and then “suck it up” and pay the tax in hopes for even bigger returns to offset it.

Others just keep a hot mic close on hand in case Akon, Lil Jon or Paris has something to say … or sing.

Go-go dancers and troupes can only go on for short periods—nine minutes at a time and no more than 20 minutes collectively in an hour, according to one club’s understanding of things. To get around that, most clubs put the girls to work as cocktail servers, shot girls or hostesses as their primary, on-paper function; those who happen to also dance as their secondary function are exempt.

This is not to say that operators are in any way knowingly—or even unknowingly—violating any statutes by having live entertainment; they’re welcome to have it! As long as they comply. Really it’s just that legal jargon and endlessly amended parts and sections have been passed down from exec to exec and paraphrased verbally so many times as to have become a sort of oral history or game of legislative telephone. Without knowing quite where to go to find every little FAQ, and with so many promoters, talent wranglers and marketing coordinators having their hands in the final product these days, many clubs just grit their teeth and move forward in good faith that what they are doing is compliant.

But don’t take my word for it; every venue is unique. Anyone curious—or plagued by insomnia—should check out the Nevada Department of Taxation at tax.state.nv.us and the Nevada Gaming Control Board at gaming.nv.gov to see what laws apply to their particular venue.

For more with Rico DeLargo, click here.