It's a toilet, or rather the room containing the toilet. It's from a 19th Century Cockney word 'carsey' meaning a privy, and is itself probably derived from the Italian 'casa' meaning house. Interestingly, the original word 'carsey' could also mean a den or brothel! It does make you wonder what the old Cockneys got up to when they went to the toilet.
Malcolm's been in the karzy for an hour!
Crappin' or five finger shufflin'?
With Malcolm you really don't want to know.