In today's environment and culture, I think it is highly unlikely a LE official of any sort could weild this kind of power. To allow a blatantly illegal activity to go on through the tendering of bribes and sexual favor, I am damn sure that they would be hung out to dry and flayed. There are too many fanatics within LE to allow something like this to go on... Maybe 20 years ago, or even 10, but not now. Not with cutbacks, staff shortages, and the scrutiny that the force itself is under. This kind of corruption would be ferreted out instantly by someone either on the force, or a citizen critical of it.
I think Kal does not allow FS because of the potential threat, not the real threat. He has a lot invested in the building and leaseholds, and he wants to protect that, and rightly so. The reason the others don't care is they can make the same money as Kal, without the capital investment, attract girls more easily because the "tips" are more, and should the threat of prosecution become reality, closing it down doesn't really affect them. It just means the gravy train stops.
Not saying either is right or wrong, just sayin...