Green’s Dictionary of Slang

velvet adj.

SE in slang uses

In compounds

velvet room (n.)

(US) the back room of a saloon where patrons might enjoy a slightly quieter and more salubrious atmosphere than in the rowdier front.

[US](con. 1830s+) H. Asbury Gangs of N.Y. 27: One famous saloon, in Baxter street near the Bowery, provided and extensively advertised a rear chamber called the ‘velvet room.’ When a good customer was reduced to a nickel, he was given an extra large bowl of liquor and escorted with considerable ceremony into the ‘velvet toom,’ where he was permitted to drink himself unconscious.