A recently discovered series of tar pits, the Basin City government saw it as a way to capitalize on tourism and turned it into a park. A failure originally a 'dinosaur movie' (a probable reference to Jurassic Park) revived interest in dinosaurs and fossils making the Basin City government spend thousands of dollars rigging up impressive dinosaur statues. This proved to be successful until an elderly woman fell into a pit and had a heart attack from panic. The negative publicity shut down the Pits as a government project for good.
Criminal Dumping Grounds
The Pits' commercial failure didn't stop Sin City's criminal element from finding a new use for them. Soon it became the go to place for dumping dead bodies from Dwight McCarthy trying to rid himself of the evidence of Jackie-Boy's death (The Big Fat Kill), to petite assassin Delia who used it as a place to seduce her first official victim.
The Pits are obviously inspired from locations such as the La Brea Tar Pits.