On May 15, 1905, the San Pedro, Los Angeles & Salt Lake City Railroad auctioned off commercial and residential lots in the Clark Las Vegas Townsite, now the core of downtown Las Vegas. As part of its plan for the fledgling town, the railroad set aside two blocks in the northern section, Block 16 and Block 17, as the only places where liquor could be sold without licensing restrictions.

Block 16 soon evolved into the town's red-light district. Bordered by Stewart on the north end, Ogden to the south, First to the west, and Second to the east, Block 16 offered locals and weary railroad travelers a variety of recreational opportunities such as billiards and bowling.

But Block 16 became infamous in the western United States for its string of saloons with drinking, gambling, and in some places, wide-open prostitution. At first the buildings were made mostly of unstable wood and tent canvas, but saloon owners rebuilt them using bricks, mortar, and wood after the town outlawed tent structures.

From about 1906 to 1912, brothels were located in rooms in the rear, known as "cribs," in such Block 16 saloons as The Arcade, Double O, and Star Saloon, all on the east side of First Street between Stewart and Ogden.

Other Block 16 bars without brothels included The Gem, Red Onion Club, Turf, Favorite, and Arizona Club, considered the town's finest saloon. But in 1912, when the Arizona Club at 219 North First Street was sold, the new owner built a second floor to house a bordello and the saloon became known as the "Queen of Block 16."

Before air conditioning came to Las Vegas in the 1930s, Block 16 looked bleak and practically uninhabited most months in the daytime desert heat, but came alive in the cooler evening hours.

For decades, local officials and residents expressed disapproval of Block 16 and its brothels, with some calling for the city to close them. But Las Vegas passed no laws against it and tolerated the block—and the increasingly shoddy appearance of its cheaply made buildings—into the early 1940s.

One early resident, Ed Von Tobel, later recalled that the city government monitored the women working in the brothels, and required them to be examined by a doctor once a week.

In January 1920, the Eighteenth Amendment to the U.S. Constitution went into effect, banning the transport and sale of alcohol throughout the country. During the thirteen years known as Prohibition, until the law was repealed in 1933, the saloons on Block 16 operated and sold alcoholic drinks in secret as did other so-called "speakeasies" around the United States.

By 1941, when the U.S. Army sought to locate base facilities in Las Vegas, the military told city leaders the town would be off limits to personnel if prostitution remained at Block 16. City officials, eager for the business the military's presence would bring to Las Vegas, quickly decided they could no longer afford to ignore Block 16's brothels.

On December 2, 1941, city officials directed police to raid the block. Sixteen officers, including the police commissioner and police chief, arrested twenty-two women on prostitution charges. But after posting $50 bail each, nearly all of the women returned and the brothels reopened.

Prostitution remained on Block 16 for several weeks until city commissioners voted on January 6, 1942, to cancel the liquor and slot machine licenses for all of the block's saloons. Without those sources of steady cash, the saloons and the brothels soon closed.

During the rest of World War II, the rundown former brothels became cut-rate rooming houses. Finally, in January 1946, the city declared the old structures hazardous and ordered them demolished. Eventually, parking lots were constructed on the site of Block 16, and remain there, behind Binion's casino and east of the California Hotel.