The thing is that Kyros leaves most of specifics to the ruling Archon of the region (so-called Archon's Privilege). Thus, if you take this quest after uniting the Tiers in Act III, anything you choose is the law as long as it doesn't directly contradict the Overlord's will. It also makes the starting case (The Ones Who Got Away) easier as the Spires and, by extension, the Oldwalls are your domain and Archon's Privilege allows you to let the settlement stand within restrictions of Kyros' laws.
I've read on another forum that gambling is not forbidden by itself, but it can cause all sorts of commotions so it remains somewhat unwanted.