The US Constitution has a clause that forbids states from interfering with existing contracts. The intention was that States could not abolish private debts (which had support in the 1780s). It was a good provision rarely cited till about 100 years later.
Around 1900 (and actually starting about 1860), the US (following the UK's lead) re-wrote much of the Common Law. Long held law were reversed. For example, Rent due on rental property (unless it was clear, generally in a writing that other terms had been agreed on) went from being due at the end of the year and all leases being one year in length to the present norm of rent being due at the beginning of the month and the lease term being only one month in length (Please note this is a legal assumption that can be varied based on other evidence, i.e. a written one year lease would mean a one year lease not a one month lease).
Another change was from the old rule that people were presumed to be hired for one whole year (and often paid at the end of the year) to the present rule that people are paid monthy and can be fired or quit at any time.
The "Three evil sisters of the Common Law" finally crossed the ocean (the Three sisters, The Fellow Servant rule, Assumption of the risk, and contributory negligence) . These three evil sisters did not exist even in England prior to about 1800, but finally adopted in the US after about 1860.
The US then expanded the Contract clause of the US Constitution to forbid any regulation that restrict people's right to contract. For Example in 1905 the US Supreme Court ruled it was a violation of the Contact clause (and substantial due process) for a state to forbid a baker from working more then 16 hours a day. Lower courts expanded on this to include forcing people to do things they had contracted to do (and this being post Civil War, the courts had to work around the wording of the Post Civil War Amendments in regards to slavery and did so, if a contract was entered into).
After 1900 this movement ran into reality, but then demand that if a State or Federal Government wanted to regulate something, there had to be overwhelming evidence to support the need for such regulation.
That was the situation in 1900, when more people lived in RURAL American then URBAN American. That would reverse by 1920 and with that reversal a desire to regulate what went on where in urban areas. prostitution had always existed both in Urban and Rural America but starting about 1900 the need to regulate it became more and more a demand from the Upper Middle Class who did NOT want it in their neighborhoods (This same desire to protect they neighborhoods would later lead to Zoning Laws, that barely survived a Constitutional attack in the 1920s). Given this opposition to regulation and no one wanting to pay money to defend local regulation of prostitution all the way up to the US Supreme Court, most cities opt for one way the Supreme Court has permitted regulation, making something illegal.
Once the act of prostitution was illegal, any contract involving prostitution was no longer a valid enforceable contract. The Supreme Court had long ruled that a State could regulate contracts to be entered into in the FUTURE just could not regulate existing contracts. Thus the only way to regulate prostitution was to make it illegal. The need to regulate was clear by 1900 so between 1900 and 1920 prostitution was made illegal in most areas of the US.
From that point on the Police and local courts regulated prostitution through they ability to arrest anyone doing it for it was illegal. The primary concern was where prostitution occurred, thus prostitutes were often left alone in certain areas the police knew they operated in, but arrested elsewhere. Some jurisdiction added medical testing, but most did not for the concern was not the prostitutes but upper middle class residents complaining about them operating in their neighborhoods or where they went shopping.
By the 1930s this system or regulation was working and continued to work to this day. Is it perfect? no, but it is a system of regulation the Police and Courts are use to. In fact most proposals to legalize prostitution keep running across the same problems that lead to prostitution being illegal. How to regulate it and keep it out of certain neighborhoods?
To be constitutional Zoning has to Zone for everyone, right now no one needs to zone for prostitutes for prostitution is illegal (and legal sex industry, i.e. "Gentlemen's clubs" have a hard time getting permission to open due to "Zoning concerns"
. This is one of the biggest problem when it comes to legal prostitution, where do you want it to occur? LA, which has legal marijuana, has had pressure to close down most if not all of the cannabis stores. Not because people want marijuana (including businessmen in commercial districts) to be illegal, the just do NOT want the store in their neighborhoods. Bars have a similar problem, unless there are pre-existing, hard to get a new one built except if it is a restaurant or "sport's bar" i.e. where food is clearly first and booze second.
Thus WHERE the prostitutes will be permitted to work is the biggest question as to legalization. No one even mentions this, for to mention is to address it and to address it you have to decide where it will be. The problem is NO ONE WANTS IT IS THEIR NEIGHBORHOOD and thus its mostly exists in poorer neighborhoods where the police leave it exists for the poor have the worse voting record. The problem is then these poor neighborhoods slowly lose population and the people that can vote with their feet. This just makes the place even worse and sooner or later something has to be done, the neighborhood is destroyed and the prostitutes move to the next section of poor housing.
Even if the prostitutes stay inside, such houses bring with them some bad characters. Now, high end ones do not, but most prostitutes are NOT $1000 a nighters, most $25 to $50 for a quickee. The high end no one really cares about, except the prostitutes only work there in their "prime" and then go to lower rates after get to old, i.e. over 25 (25 is also the general cut off for Strip Clubs, you do have some older, but most are below age 25). Thus the concern is not the high end 21 year old hooker, but the same person five years later. You see a general deterioration of where such prostitute work even in Nevada. The legal places have the young ones, then when they get to old the prostitutes go to lower rates houses. Drug abuse adds the decline in where the prostitutes works.
Now, $1000 a night prostitute can do their business in a high end housing and no one will complain. The problem is at best this is just for a few years AND most prostitutes are NEVER in a position to charge a $1000 for their services (The going rate is much lower often $25 to $50 for a quickee). It is this vast majority that people object to, not the $1000 hookers (Most are amazed that there are men who can pay $1000 for a one night stand, most people, including most men could not even image paying that much for a one night stand).
Thus the thrust of regulations in the US had been aimed at making sure prostitutes operate only in certain areas and during certain times. Even the $1000 a night hookers get busted if the Police finds that what the are doing is outside the area where they are suppose to work. The Police, Courts and local Government understand the present regulatory system (Prostitution is technically illegal, thus the Police can regulate by arresting anyone operating NOT where the police want them to be). It may not be logically or what other countries have done, but this regulatory system has worked in the US since about 1900 and given what has to occur if prostitution was legalized, including actually formally deciding where it shall occur, the present system of regulation is the best we can do in the USA.
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