Many libertarians like to point out that it is an alliance of "Bootleggers and Baptists" that drives legislation like Prohibition.First of all. government interventions are not in any way a stool, they are always hammers (If not machine guns).
But that is just a two-legged and stool, and it won't stand without its third leg: libertarians! By presenting complete license as the only alternative to full prohibition, the libertarians serve to drive people into the camp of the bootleggers and the Baptists: if the only alternative to having prostitution publicly marketed to one's children is a complete ban, then a lot of people will opt for the ban.
We used to have more sensible options on the table: prostitution was permitted, but in a defined red-light district, and certainly couldn't be widely marketed. But we live today in an age of extremes.
Second, the libertarian perspective does not state that any act must be allowed on any property. It is about respect for private property, which can include the banning of prostitution on a property by its owner.
At least that's the view of libertarians who subscribe to a Private Property Society perspective. Maybe Callahan is thinking of libertarians who believe in some sort of over-ruling body based on "culture" etc.