Bobbi's Storyville thread
http://sex-in-nevada.net/smforum/index.php?topic=23759.0 demonstrates what a full blown real red light district, versus a mere advertising label, is.
Historically, these have been common in towns and cities throughout the US (ignoring the rest of the world for this discussion) such as Hotel Street in Honolulu, the various tenderloins of San Francisco and New York, "The Line" in Dallas and so forth. I suspect the publicly open versions have gotten closed down largely because they are an easy mark for politicians, being, like "assault gun" bans a means of appearing to take action without actually changing anything, particularly sources of contributions and graft.
It's an interesting contrast between how the Navy handled Storyville and how it approached Hotel Street. Both were viewed as the source of STDs (then VD), but while Storyville was forced underground, they placed Hotel Street under the supervision of the Provost Marshall, registered the ladies and instituted regular medical checks, as well as providing the troops with condoms.