Prostitution pumps millions into Nevada's economy

by Lois Gormley, Outpost staff

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In most states it's a dirty word, used to describe illegal and some would say immoral acts. But in Nevada, the state made famous by embracing vices shunned elsewhere, prostitution has become legitimate big business.

Since counties began legalizing prostitution in the early 1970s, they have been reaping an economic benefit from a variety of brothel-related revenue sources, including licensing fees, property tax, work card fees and liquor licenses. In total the sources pump more than $10 million into county coffers annually, according to one state study.

Kate Hausbeck, a sociologist at the University of Nevada-Las Vegas, said that while historically the legalization of prostitution in Nevada was an economically driven endeavor, the ecomomics no longer account for the continued existence of the brothels.

"It's really problematic to say that this (economics) is why they exist," Hausbeck said.

She said in some rural communities other businesses have grown to overshadow the brothels as the largest contributor to county budgets but the brothels themselves continue to exist if not for monetary reasons, then for those of tradition or civic participation.

Getting a handle on the economics of prostitution in Nevada is a difficult task at best. For one, it is still considered a taboo topic by certain segments of the population. For that reason, state and county officials shy away from touting their earnings off prostitution.

Another obstacle is the lack of studies on the issue. The only recent state-sanctioned study was done nearly five years ago by an interim legislative committee, said Ted Zuend, fiscal analyst for the Legislative Counsel Bureau.

That study, conducted by the bureau, placed the total county revenues from legal prostitution statewide at $10 million for the 1994-95 fiscal year. Normally the bureau -- or any other state agency for that matter -- doesn't keep track of such revenues.

"I wasn't involved in that study, but I don't believe anything else has been done since then," Zuend said.

Last year, two University of Nevada-Las Vegas researchers began one of the few other known studies on the industry. Prostitution, either legal or illegal, is rarely studied in Nevada, they said.

One reason seems to be a lack of available data. Hausbeck said they have access to public records, such as tax returns and county budgets, but in terms of what the brothels make in profit beyond that is a very private thing that's difficult to get information on.

"Actual raw amounts of money and how they flowto the house, to the womenthey're very protective of that information," she said.

Hausbeck said we tend to ask questions of brothels and other parts of the sex industry that we don't ask of other legal cash-based businesses. She added it is unlikely that other cash businesses, such as bars or restaurants, would be any more forthcoming than the brothels with such private information.

This lack of study comes as no small surprise given that fact that the state doesn't reap the rewards of this million-dollar industry. Because there are no state taxes and because it is up to each individual county to decide if it wants to allow prostitution within its borders, the only real revenue the state sees come from sales tax on bar sales, said Nevada State Tax Examiner Ruth Jones.

"Bars associated with the houses pay sales tax," Jones said. "I don't know that much about the houses but I assume most of them have bars."

These state revenues are above and beyond the estimated $10 million collected from county sources. But how much above is unclear. The Department of Taxation does not separate tax from brothel bar sales from taxes from other establishments, so no estimate of the state economic impact is available, Jones said.

One other minor fee goes to the state. Brothels, like all other businesses, also are required to purchase a state business license, with fees of $25 for each full-time employee paid on a quarterly basis.

Figuring that impact is equally problematic, because estimates of the number of prostitutes working legally in the state vary widely -- 300 to 800 in 33 to 35 establishments.

Bar sales tax and licensing fees are where the state's involvement ends--even the liquor licenses are obtained from the county.

In fact there is only minor mention of prostitution in state law--prohibiting it in counties with populations exceeding 400,000--a law which only excludes Clark and Washoe counties. Of the remaining 15 counties in Nevada, 10 allow brothels to operate within county borders.



Posted Dec.11, 1998
Copyright 1998 Nevada Oupost