Laws, in the end, are just legal levers people can use--if they feel impinged-upon, and see no more personal recourse--to seek justice. At scale, you don't have personal relationships with your customers, so you have to obey every letter of every law. Before then, though--when you're small, and when you know each customer well-enough that you could call them friends--those customers have other ways to seek justice for things you do to them. Like, say, complaining to you.
This case is very similar to another I remember reading about on HN: an "extremely exclusive restaurant" in New York, which is not only invitation-only, but whose location is a well-protected secret. Why is it a secret? Because the "location" is an apartment! No restaurant license; just a "retired" five-star chef, cooking for you out of his own house. Completely illegal--all sorts of regulations are being broken--but much-beloved by all involved.
This is the kind of thing you can do when you have personal relationships with your customers. This is what you do that gets customers to love you--and can bootstrap into a big, legitimate business if you want. This is what people mean by "hustling", but everyone is afraid to say. It's going out on a real limb--not just sacrificing your own financial nest-egg, but giving your customers the ability to blackmail you or put you in jail if they decide they really don't like you. But this is what makes magic happen.
(Note that I'm totally not advocating the other kind of "hustling", the one done by grey-hat SEO "growth hackers." If you're a small, scrappy startup breaking laws that protect people from bad businesses in their service, and to earn their gratitude, then you'll likely be okay; but if you're breaking laws to "achieve growth" but earning people's spite in the process (you know, those "people who weren't gonna be your customers anyway, so screw 'em"), then please don't follow my advice. Don't go out on any limbs. Stay well inside, where we won't have to deal with you.)