It's time for the final showdown with the Mafia Boss. With the help of Mustache Girl, the Hat Kid finally is able to confront the Mafia boss. After defeating the boss, Hat kid recovers the Time Piece, but to her surprise, Mustache Girl takes it from her, accidentally drops it and discovers the power of the Time Pieces. Mustache Girl tries to convince Hat Kid to use it and to change time in a way, so the mafia never existed at all, but when Hat Kid refuses to join Mustache Girl, Mustache Girl gets furious and turns into Hat Kid's enemy.
Location: inside the Casino.
There is a glitch in the final cutscene of the chapter, where Hat Kid's eyes are closed but part of them can still be seen clipping under her eyelids.