I thought that “red” in this usage would be clear, but it is not. From yourdicionary.com: http://www.yourdictionary.com/paint-the-town-red#wiktionary?direct_search_result=yes
US slang. Earliest known use 1884. Various theories include the red from bonfires, the heat from over-stoked paddle-wheel boilers, and town demarcation lines in the Wild West. A British claim attributing it to the actions of the Third Marquess of Waterford predates the first known use by decades.
English Wiktionary. Available under CC-BY-SA license.
Read more at http://www.yourdictionary.com/paint-the-town-red#wiktionary?direct_search_result=yes#dy33ffV6I2zq34Ag.99
What exactly is a “town demarcation line in the Wild West”? I don’t recall ever seeing any red lines in western movies. And just how would that explain the usage?