Rough Recession Tests Brothel Boundaries

To understand just how bad the economy is in Nevada these days, look no further than Dennis Hof and the strange opportunities he sees on the horizon.

With a porn star named Sunny on his arm, Nevada's most famous brothel owner was on a shopping spree, looking to pick up a newly shut down casino in the heart of downtown Reno.

"This is it. I love this place," Hof said as he exited his limo. "Look at this. We could put right up here 'Sunny Lane Appearing.'"

"Yes, I love it!" Sunny said.

Hof and his Bunny Ranch brothel are the stars of HBO's hit "Cathouse," a reality show set in America's most-famous legal brothel.

"You're on the biggest street in Reno," he said from the limo. "You're on Virginia Street. This is where all of the hotels are, where all of the casinos are. And this is where we need to be. This is where the Bunny Ranch needs to be stationed."

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The Underground World of Commercial Sex

Nevada is the only state in the nation to legalize the world's oldest profession, but only in the most rural counties.

The big cities of Reno and Las Vegas remain off-limits.

But that is a boundary this recession is now testing as the brothel business becomes a target of opportunity for a state in desperate need of tax revenue.

Nevada State Sen. Bob Coffin said there is a $2 billion budget shortfall and proposed cuts that include teacher salaries have left Nevada with little choice but to get creative.

"People are licensed to gamble," Coffin said. "They are licensed to sell cigarettes. They are licensed to sell alcohol. Why not license everything we consider a vice."

Including sex.

His proposal is to tax the state's legal brothels. Right now, they pay county taxes. He'd also like to decriminalize prostitution statewide, clearing the way for the brothel business to set up in Reno and "sin city" itself -- Las Vegas.

The state senator estimates that Nevada could bring in an immediate $2 million a year by taxing the existing brothels, and up to $200 million a year if the brothel business is allowed to expand into Vegas.