The Collaborative International Dictionary of English v.0.48:

Madhouse \Mad"house`\, n.
   1. An house or institution where insane persons are confined;
      an insane asylum; a bedlam; -- usually used in a
      deprecatory sense.

   Syn: Bedlam, booby hatch, crazy house, cuckoo's nest, funny
        farm, funny house, insane asylum, loony bin, nuthouse,
        sanatorium.
        [1913 Webster]

   2. Hence: (fig.) A chaotic, raucus or highly disordered
      situation.
      [PJC]

WordNet (r) 3.0 (2006):

madhouse
    n 1: pejorative terms for an insane asylum [syn: Bedlam,
         booby hatch, crazy house, cuckoo's nest, funny
         farm, funny house, loony bin, madhouse, nut house,
         nuthouse, sanatorium, snake pit]