It’s pre-recorded, but the show is recorded “Live on Tape,” as Hank Kingsley proudly announces at the top of every show. That means that the show is filmed start-to-finish in its entirety, with the same timing that will be used in the broadcast. Also, the show airs every weeknight, and each night’s show is filmed that afternoon - the same way Colbert, Kimmel and the others do it today, with the exception of pre-taped and edited segments that take a little longer (and were significantly rarer in the late 90s). Some of the drama is certainly manufactured for the show, but the time constraints largely make sense imo.