To be more specific, Jim was referring to the scene (seen below) in which Mary Steenburgen (Diana) is singing in a lounge inside Binion's which is stumbled upon by Morgan Freeman (Archie), Robert DeNiro (Paddy), Michael Douglas (Billy), and Kevin Klein (Sam).
Throughout the film, this lounge is referred to as "The Showplace" and is presented as being inside the Fremont property. This, however, is not the case. As with many Hollywood fabrications, the lounge was the creation of Hollywood magic. Although much of the movie was filmed on location at Binion's and Aria, the portions showing the lounge were filmed on a sound stage in Atlanta.
Unfortunately, this is just another Vegas trick played by Hollywood; but, we could all easily imagine the lounge existing in downtown Vegas. The movie uses a few cues to really fool the viewer, but the exact bar is not real and not many like it have survived the purge of new Vegas, even in downtown.