Massage therapy and prostitution are similar but prostitution is illegal primarily because it's associated with violent crime, sexually transmitted diseases and pregnancy. Clients have a habit of promising to pay large sums of money and then not paying anything which leads to violent crime and homicide. Additionally they also refuse to wear condoms.
During the Great Recession new dating websites appeared which connect women with men who promise to pay them for a date or for an "arrangement" which is companionship and sex on an ongoing basis. They state how much money they're offering on their profiles or they'll email an offer, however, instead they have sex with several women on the website and never pay anyone. It's like eating in a restaurant and sneaking out before the server gives them the bill. The websites do not provide collection services on behalf of the women which means that they don't get paid. Experienced prostitutes already know that they're not going to get paid before the date happens and so they're prepared to do things that they shouldn't have to do, such as stealing the man's wallet or calling a pimp which is a collection agent with a gun.
Anyone who has ever owned a small business knows that it's common for customers to buy things that they can't afford and when it comes time to pay for it they'll refuse to under various false pretenses. For example, in Lake Tahoe a building contractor ordered cabinets and he specified a "distressed" finish which costs more money, and when the final payment was due he complained that the finish was more distressed than he thought it would be and he refused to pay it. (In California the courts have a law about that which is referred to as "Substantial Performance" which means that the customer still has to pay the cabinet shop). Customers do the same thing to prostitutes. Men drink too much alcohol and then they can't hold an erection and reach orgasm, and they don't want to pay for their failed sex session and so they blame their prostitute by saying that she's unattractive and/or inept.
An outsider who knows nothing about such things would assume that the customer would reschedule if he drank too much alcohol. For example, if one had chickenpox than he or she would reschedule his or her appointment for a back massage at a luxury hotel. The important difference is that customers know that prostitutes can't force them to pay their bill. A luxury hotel can charge their credit card or send their account to a collections agency, but what can a prostitute do? That's where pimps come in with violent crime and that's one reason why prostitution is illegal.
Nevada legalized prostitution but they regulate it by monitoring licensed brothels. In other words, prostitutes are not allowed to be self employed and work from home because it would be impossible for the state to regulate.
It's legal to advertise massage therapy and so many prostitutes disguise their services as such. In San Francisco some massage parlors hang red curtains in the windows because they want everyone to know that it's actually a brothel.
The Internal Revenue Service ("IRS") can't audit businesses that provide a service in exchange for cash, but with that said, they allow massage therapists to be self employed and to do their own bookkeeping. That is another reason why prostitutes disguise their services as such; by making money legally they can have bank accounts and credit cards like everyone else.