Phillip Crawford Jr: The Mafia was behind many speakeasies in the big cities, such as Chicago and New York, during Prohibition. After Prohibition was repealed, state agencies regulated bars with vague standards against disorderly premises and moral indecency, which were interpreted to prohibit serving gays. Accordingly, the Mafia took its experience with speakeasies and used it to operate gay bars, which involved paying off the police departments and liquor authorities charged with enforcing these discriminatory laws.
Well, the Mafia didn't much care about enforcing societal mores or respecting government rules. Ernest Sgroi Sr, one of the principal fronts for gay bars controlled by mob boss Vito Genovese in Greenwich Village, obtained his first liquor license right after the repeal of Prohibition. He was involved with some of the most popular gay bars during the post-war years, including the Bon Soir and the Lion, which started off as nightclubs with live entertainment attracting both straight and gay patrons but ultimately became predominantly gay bars. The Lion was where Barbra Streisand made her first public singing performance in 1960.
The Mafia controlled most gay bars due to their illegal status, and extracted a monetary premium from the gay community. This recognized both the legal risk the Mob was taking and the near-monopoly status it enjoyed. After all, where else were gay folks going to meet? There were often high cover charges and minimum drink requirements. Moreover, gay men were at risk of blackmail from their Mob overlords. The Mob's exploitation of the gay community was among the reasons for the 1969 protests outside the Stonewall Inn. Indeed, after the Stonewall protests, once of the principal goals of the activist groups such as Gay Activists Alliance and Gay Liberation Front was to get organized crime out of the gay bars.