Even if it were legalized, it would not completely eliminate the illegal prostitution. You would still have prostitutes that could not be licensed, due to disease, etc., continuing the "trade." Until the stigma of using a prostitute goes away, you will still have those willing to risk an "unlicensed" hooker because they don't want to be seen going into the brothel or can't afford the higher priced girls who would come to you.
Nevada has legalized prostitution, but they still have trouble with street walkers.
Edited, Aug 21st 2006 at 3:01pm EDT by BloodwolfeX