Las Vegas banking on Britney: Singer announces two-year residency at Planet Hollywood casino as Sin City seeks to offset continuing fall in gambling revenue

Las Vegas has taken its latest gamble. This week, Britney Spears announced plans for a two-year residency, beginning in December, at the Planet Hollywood resort and casino on the Vegas Strip. Some reports suggest the star will be paid $310,000 (£194,000) for every performance of her show "Britney: Piece of Me" – a total of $15m for 50 shows per year. Each 100-minute concert will include a mix of new tracks and greatest hits, with a live stage spectacular designed by the award-winning director Baz Halpin, veteran of tours by Katy Perry, P!nk and Taylor Swift.

According to Kurt Melien, the head of entertainment for the Caesars group, which owns Planet Hollywood, the 4,600-capacity theatre is being radically overhauled to accommodate the 31-year-old and her fans. "We're renovating this theatre in a big way to create a dance club/nightclub experience," Mr Melien told Billboard. "We've designed this theatre to create a different experience that attracts a younger customer."

Though Spears enjoys the mass appeal of previous Vegas divas such as Barbra Streisand and Celine Dion, her primary responsibility will be to render unto Caesars her core, 20-something fan-base. Her residency is a reflection of Sin City's changing face: once a gambling den for the glamorous rich, and then a family-friendly holiday destination, Vegas is now a party town for young people, the hub of America's late-blooming Electronic Dance Music (EDM) craze.

The US may have taken 25 years to catch up with UK rave culture, but it's embracing it as only the US can – not as a grassroots movement, but as a massive corporate enterprise. The new kings of the city that once hailed Frank Sinatra and Liberace are superstar DJs: Diplo, DeadMau5, David Guetta. The Scottish producer/musician/DJ Calvin Harris, whose unremarkable face graces the billboards of the Strip, earned $46m last year. Tiësto took home $32m in 2012 – this summer, for the first time in a decade, the Dutchman did not play Ibiza, preferring lucrative residencies at two Vegas clubs.

Resorts, meanwhile, are introducing elaborate spectacles to squeeze value from their knob-twiddling new saviours. In May, the Mandalay Bay opened its $25m nightspot Light, which matches EDM to acrobatic displays by that Vegas institution Cirque du Soleil. A month earlier, the MGM Grand opened its $100m, 80,000-square-foot mega-club Hakkasan Las Vegas, with investment from the Manchester City owner Sheikh Mansour. Scott Sibella, of MGM Grand, recently told Forbes: "I don't think anybody in this town, in my opinion, really knew that electronic music would take off the way it has."

Entry to such establishments does not come cheap. When I visited Vegas this year, I was quoted $350 for bottle service (a table for four, a single bottle of spirits and a selection of mixers) at the Cosmopolitan hotel's popular Marquee club on a weeknight, not including taxes or tip. That was cheap: entry to a Harris show at Hakkasan may set you back $50, but a table on a Saturday could cost $10,000. If you can't wait for a nightclub, there are day-clubs, too: swim-suited EDM enthusiasts pack the Bare Pool Lounge at the Mirage, or Liquid at the Aria, in the afternoons. These new Vegas visitors are not the tuxedo-clad high-rollers of Ocean's Eleven. Instead, they're Spring Breakers-style party animals, liable to end the evening with a drunken game of strip pool.

For those who own the resorts, the downside of the EDM phenomenon is that their guests are forgetting to gamble. According to Time magazine, the city counted 39.7 million visitors in 2012 – more than the record set in 2007, before the recession struck. This year, Vegas expects to draw 40 million. And yet, gambling revenue was last year down 13.6 per cent on 2006. Gambling is traditionally the key profit driver for the Strip's hotels and casinos, but more than half of its visitors' holiday cash is now spent beyond the casinos: at restaurants, shows and clubs.

To this first-time visitor, Vegas resembled a vast, inescapable cruise ship, floating on the dry ocean of the Nevada desert. Its hotel rooms are run on a cruise-like pricing system: the prices drop until the ship is full. Accommodation is the best value item in a greedy town, but comes on the understanding that its occupants will fritter their dollars elsewhere, at the tables and bars. Young visitors have got wise, however: they'll pack a suite to capacity, go out to clubs, not casinos – and then return to their rooms to drink pre-bought booze. Prince Harry, remember, was caught misbehaving not at a blackjack table, but in his hotel room. Hoteliers are exasperated by this trend, but can hardly turn away the custom.

With gambling apparently in decline, Vegas has little choice but to rely on young clubbers to cover its extravagant costs. The bigger the spectacle and the stars like Spears and Harris, the more it is hoped they will spend. A risky roll of the dice, perhaps – but then, who'd bet against the house?