Prohibition, of course, was a law banning the sale and consumption of alcohol. Gatsby throws large parties with extravagant bars. Everyone knows that liquor is being served, yet legal enforcement is never a factor. The elite flaunt their ability to serve and consume liquor, as if they are above such petty laws.
I think in a couple of ways. First, there are great rumors about where Gatsby first aquired his money. Bootlegging is the most popular suspicion.
More importantly, for a time in American history where alcohol was deemed unsafe and unfit for social consumption, don't you think an awful lot of these events occur with the presence of booze? All of Gatsby's parties are centered around the idea of free food and drink. Nick admits to being too drunk at Tom and Myrtle's apartment to really remember what happened. Everyone was drinking at the Hotel the day of Myrtle's death. And at many of these social drinking outings, Fitzgerald has made it clear that the use of alcohol makes for a "proper" atmosphere. How much fun would the various people at Gatsby's parties have been if they were sober? Further, Gatsby throwing these huge, alcohol infused parties was his way of inviting Daisy's crowd (and her) to his place. Would Daisy's crowd (and she) have been present without the promise of free booze?
Tom Buchanan is quick to criticize Gatsby for bootlegging in the hotel as they consume alcohol.
The Prohibition Era was one of wildly divided popular opinion with respect to the value of prohibition laws. While the rural and agrarian sections of the nation generally supported prohibition laws, the urban centers on the coasts and in the midwest ignored the laws. In cities such as New York, Chicago, and Detroit, liquor flowed in quantities greater than before prohibition. In many instances, alcohol was supplied by organized crime syndicates. Otherwise law-abiding citizens of all classes willingly paid the asking price - for the great irony of the prohibition laws was that while it was illegal to sell, manufacture, or distribute alcoholic beverages - those same beverages were legal to consume.
With the hypocrisy of prohibition as a backdrop, it is more than appropriate that Gatsby made the fortune that he thought would reignite Daisy's love for him, by profiting from ignoring an ill-conceived law. At the same time, Gatsby engages in the ill-conceived romantic notion that his wealth will somehow make him an equal with Tom Buchanan and the "old money" types of East Egg. It is here that Fitzgerald unfolds, through Nick's narrative, the hypocrisy, dishonesty, racism, sexism, and class bias of the upper class. Nonetheless, though Gatsby sees the hypocrisy, he is blinded by his love for Daisy, and ultimately dies in pursuit of his romantic dream, while Daisy and Tom continue to live their hypocritical lives with few negative consequences.