This is something that hasn't strictly been confirmed, but I want to bring it up anyway because this wiki already *has* information that hasn't been officially mentioned, most notably the Mote of Light page. I don't want to simply go ahead and do it without bringing it up for discussion first, but from looking through the available game footage and coverage, I suspect we're going to need a separate Lady Luctopus (boss) and Lady Luctopus (location) page.
The way I think it most likely works is that there's a casino in the real world called Lady Luctopus. The Psychonauts go on a mission there (The Casino Mission, as mentioned by Raz *before* entering Hollis' mind), but as this mission is too dangerous, the interns are not allowed to come. Raz then changes Hollis' mind (literally) to make her less concerned about safety so that the interns can go after all. All shots in the footage showing the aquatic-themed Lady Luctopus casino have Raz with his goggles up, suggesting they take place in the real world.
After or more likely during this mission, Raz needs to head back into Hollis' mind to set his mistake right again, where he discovers her mind has become completely casino-themed. The root of Hollis' gambling addiction has taken the *shape* of the real-world casino: this is the boss Lady Luctopus.
I'd like to hear if anyone has any thoughts about this.