I dont think that prostitution was banned. Its one of the biggest markets still to this day. The Outfits original boss were heavily involved in brothels and white slavery. Luciano was one of the biggest drug dealers in the country at the time, i doubt it was beneath him to make money off of prostitution.

I think luciano in this day and age would try and put mob back in to the status it had during his time and the control they once had over everything including drugs, but i think he would fail either by going to prison or getting murdered.