The Stonewall Inn, located at 51 and 53 Christopher Street, along with several other establishments in the city, was owned by the Genovese family. In 1966, three members of the Mafia invested $3,500 to turn the Stonewall Inn into a gay bar, after it had been a restaurant and a nightclub for heterosexuals. Once a week a police officer would collect envelopes of cash as a payoff; the Stonewall Inn had no liquor license. It had no running water behind the bar—used glasses were run through tubs of water and immediately reused. There were no fire exits, and the toilets overran consistently. Though the bar was not used for prostitution, drug sales and other "cash transactions" took place. It was the only bar for gay men in New York City where dancing was allowed; dancing was its main draw since its re-opening as a gay club.
Visitors to the Stonewall in 1969 were greeted by a bouncer who inspected them through a peephole in the door. The legal drinking age was 18, and to avoid unwittingly letting in undercover police (who were called "Lily Law", "Alice Blue Gown", or "Betty Badge"), visitors would have to be known by the doorman, or look gay. The entrance fee on weekends was $3, for which the customer received two tickets that could be exchanged for two drinks. Patrons were required to sign their names in a book to prove that the bar was a private "bottle club", but rarely signed their real names. There were two dance floors in the Stonewall; the interior was painted black, making it very dark inside, with pulsing gel lights or black lights. If police were spotted, regular white lights were turned on, signaling that everyone should stop dancing or touching. In the rear of the bar was a smaller room frequented by "queens"; it was one of two bars where effeminate men who wore makeup and teased their hair (though dressed in men's clothing) could go. Only a few transvestites, or men in full drag, were allowed in by the bouncers. The customers were "98 percent male" but a few lesbians sometimes came to the bar. Younger homeless adolescent males, who slept in nearby Christopher Park, would often try to get in so customers would buy them drinks. The age range of the clientèle was between the upper teens and early thirties, and the racial mix was evenly distributed among white, black, and Hispanic. Because of its even mix of people, its location, and the attraction of dancing, the Stonewall Inn was known by many as "the gay bar in the city".
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