Bulls---.
The problem is that the police have decided not to crack down on streetwalkers. A combination of legalizing prostitution in registered brothels and a hard-line approach to streetwalkers would work fine (and it is working well in Nevada).
I've also heard that many of the casino dance clubs (which charge upwards of $20 for men to enter) have a large number of prostitutes who come in (ladies are permitted free at these bars). I didn't visit any of them (big name dance clubs too) so I did not personally observe them. My friends and I did see some women who seemed to be prostitutes at the hotel bar.
I doubt that all prostitution occurs outside of the Vegas city limits (as required by law). It is also not the perception I got from the locals I talked to.