Stimulus Spending

Harry Reid says prostitution is bad for Nevada's economy. Is he right?

Is legalized prostitution harming Nevada's economy?They call Las Vegas "Sin City," but not everyone in Nevada is happy about it. Among them is Senate Majority Leader Harry Reid, who called for Nevada to outlaw brothels in a speech to the state legislature on Tuesday. What Reid added to the world's oldest debate, however, was a novel argument. Describing a meeting he had with a firm that would have opened a data center in the state—"a move that would have created desperately needed jobs"—Reid said the executives balked because prostitution remains legal in Nevada.

"Nevada needs to be known as the first place for innovation and investment—not as the last place where prostitution is still legal," he continued. "When the nation thinks about Nevada, it should think about the world's newest ideas and newest careers—not about its oldest profession."

Reid's comments sparked fireworks, with Sen. John Ensign (rating by the American Conservative Union: 96.0) coming out against the ban and one brothel owner telling the press, "Harry Reid will have to pry the cathouse keys from my cold dead hands." And while some of the arguments against prostitution are essentially unanswerable, Reid's position practically cries out for further analysis. As it turns out, it is very hard to prove that prostitution is bad for Nevada's economy.

For starters, legal prostitution, which occurs only within the highly regulated brothels, is not a big contributor to Nevada's economy one way or another, despite the outsize attention it gets. State law allows counties with fewer than 400,000 residents as of the last census to decide whether to allow houses of prostitution. Ten of Nevada's 17 counties do. Washoe County, home to Reno, is not one of them. Clark County, home to Vegas, could not even if it wanted to, as it is too big. The 24 brothels currently operating mostly reside in sparsely populated northern Nevada, around the I-80 corridor.

These businesses generally cater to tourists and truckers. "It is important symbolically, just because it adds to the 'What happens in Vegas stays in Vegas,' Sin City environment," says Barb Brents, a sociology professor at the University of Nevada-Las Vegas, and an expert on the sex trade. "But it's really a very small industry." Overall, Nevada's brothels employ about 1,000 people, total, and have combined revenues in the low tens of millions of dollars per year.

That pales in comparison with the state's other vice industries. Gambling provided the state with $9.7 billion in taxable revenue last year alone. The casinos draw in millions of tourists, supporting thousands of restaurants, bars, shops, and other businesses. Tobacco, alcohol, and various forms of live entertainment, salacious or not, generate tens of millions in taxes. And illegal prostitution also dwarfs legal prostitution, with thousands of prostitutes working in Vegas.

Still, where the brothels do exist, they help create jobs and boost local revenue. Individual counties and towns determine what taxes and fees to impose on the brothels. They commonly include quarterly business fees, work permit fees, and room and local taxes. The counties say the income is significant. One Lyon County official, for instance, told an NBC affiliate the county raises $300,000 to $500,000 per year from the local brothels. "We buy squad cars with that money," he noted. The income is also helpfully stable, Brents says: "A lot of these communities otherwise depend on mining, a business that can go up and down depending."

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