The mob ran all those sleazy clubs back then. This does not indicate that Walnuts was a fruit, he was a mobster. They couldn’t care less what they made money off of. Think like a gangster in 1970. Besides the cash that bars generate, think of the extortion possibilities from the clietele, especially married guys at the time.
La Cosa Nostra owned most of the gay bars in New York, Philadelpia, and other cities well into the 1970s, including the notorious Stonewall Inn.