The Irishman is holding his Judges' Houses stage of the competition in the city, with Sharon Osbourne as his guest mentor.
However, he has told his groups that they must arrive back in the hotel by 10pm, reports The Sun.
Walsh is said to have told his acts: "Don't let us catch you doing a Prince Harry. What happens in Vegas does not stay in Vegas when you're on the X Factor - so don't get caught out."
An insider added: "The acts were excited - some of them haven't been to the States before and they wanted to go into the bright lights of the big city.
"Louis has already said that his acts are 'not here to party'. They were told they had to be back at the hotel by 10pm.
"After the photos of Prince Harry naked in his Vegas hotel room recently, bosses did not want the same happening with their acts."
However, the acts were reportedly told that they may be allowed a longer evening out on their last night if they work hard enough.
"The acts must remember this is a family show and they can't be seen in compromising situations," the source added. "[They] were disappointed, but on the last night there may be more of a chance for some supervised fun - once the hard work is out the way."
Walsh and Osbourne were present when Xtra Factor co-host Caroline Flack recently filmed a marriage scene in Las Vegas.