This is a partial transcript from "The O'Reilly Factor," October 24, 2005, that has been edited for clarity.

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BILL O'REILLY, HOST: In the "Unresolved Problem" segment tonight: Freedom of Expression. As we reported a few weeks ago, the Supreme Court of Oregon, at the urging of the ACLU and the "Oregonian" newspaper, has ruled that live sex acts are now permitted under Oregon law. This is the first time any state has ruled that way. So, what are the implications? Joining us now from Portland, Charles Hinkle, a first amendment lawyer; and Claude Dacorsi, general manager of the Safari Club. Now, I don't know now if hunting is involved in that establishment, but we'll find out.

This isn't a hunting club, the Safari Club, is it sir?

CLAUDE DACORSI, THE SAFARI CLUB: No, it's not.

O'REILLY: OK, it's a what — what.

DACORSI: It's a gentleman's club. We're a gentleman's club.

O'REILLY: A gentleman's club. OK. Are people in the gentlemen's club industry changing, now, their format of entertainment because of this ruling? And what should we expect to see in Portland and other cities in Oregon?

DACORSI: Well, I would say a majority of the clubs in the city of Portland have maintained their current status quo, if you will. There are a few who are testing the waters, but there is still some regulations, which we have to follow and we have to abide by still.

O'REILLY: What are the regulations? Well look, I mean, the Supreme Court of Oregon was quite explicit, pardon the pun, in saying that if you, as a club owner wanted to have women and men have sex in front of customers then you are — you could do that. So what's stopping you from doing it if you wanted to?

DACORSI: Well, it's just the one club owner going around and deciding he wants to test the waters and see how far he can go.

O'REILLY: Yeah, but I don't think there is any law in Oregon to stop you from having situations of live sex going on in your club, I don't think. Is there?

DACORSI: Correct. Currently there — no, not really, no.

O'REILLY: OK, so you can do whatever you want. Now, you — are you going to do this or are you going to stay with the dancers?

DACORSI: We're going to stay with dancers and we're going to maintain our current entertainment format and a majority of the clubs in town are going to maintain that format.

O'REILLY: Why are you not going to go the extra mile? You could probably get more money on the cover charge if you did? Why are you not going to go the extra mile?

DACORSI: We just don't feel it's time to explore that avenue of the adult entertainment, if you will...

O'REILLY: You feel uneasy about it morally or is it a business decision?

DACORSI: It was more a business decision. You know, it's just good for business to do what we are doing right now. You know, we don't need to go too far and upset the community. You know, we do want to be a good neighbor still and maintain our good business practices, and we just don't feel it's the right time.

O'REILLY: All right, but are there other clubs will go this route?

DACORSI: I would have to say yes, there are a few who are deciding to...

O'REILLY: I know of them are actually building little stages and little alcoves to have this go on. Are they not?

DACORSI: Little rooms, yeah.

O'REILLY: Little rooms. OK.

All right counselor, this good for the state of Oregon, sir?

CHARLES HINKLE, FIRST AMENDMENT LAWYER: Well Bill, you exaggerate and misstate the holding of the case. Maybe you didn't read to the end. This guy is in jail. Mr...

O'REILLY: Whoa, whoa, whoa, I don't care about that.

HINKLE: He's in prison.

O'REILLY: Look, Counsel, I don't care about the guy in Roseburg and did read the decision. It doesn't matter to me if he's in jail or not. He's in jail for prostitution.

HINKLE: Well, don't you understand that his business was shut down? His business was shut down, Bill.

O'REILLY: Yeah, but what I want to do is discus, today, all right, the over arch of the Supreme Court's ruling that does allow Mr. Dacorsi, or anyone else, all right, to have these kinds of displays. Now, if somebody's doing prostitution.

HINKLE: No, Bill, but you're wrong about that.

O'REILLY: ...they're going to be put in jail.

HINKLE: You're wrong about that. This guy was convicted of promoting prostitution. Under Oregon law, right now, after this decision, if you pay two performers to have sex together in front of an audience, you go to jail for promoting prostitution.

O'REILLY: OK, but you can get around that...

HINKLE: So the only thing that is legal.

O'REILLY: ...by having the customers give them tips and things like that. You know the game. Look, I don't want to do this dance Counselor. Is the Supreme Court ruling, sir, good for the state of Oregon?

HINKLE: What dance? These guys are in jail. Live sex shows between paid performers after this...

O'REILLY: OK, let's say they're volunteers.

HINKLE: ...are not going to be (UNINTELLIGIBLE)

O'REILLY: OK, let's say they're volunteers, sir. Is the ruling from the Supreme Court good for the state of Oregon?

HINKLE: You bet it is. It is a vigorous reaffirmation of the free speech principles that Oregon voters have voted on three times in the last 11 years.

O'REILLY: OK, so you think it's good?

HINKLE: And each.

O'REILLY: It's a freedom of expression issue for you. Is that correct?

HINKLE: Oregon voters say so. Three times in the last 1q years said they don't want restrictions on sexual activity in free speech.

O'REILLY: OK. Why can't you have sex, then — are you married, sir? Counselor?

HINKLE: What business is that of yours?

O'REILLY: OK, why can't anyone who's married or even unmarried, have sex on their front lawn?

HINKLE: Oh, because time, place, and manner regulations have always been enforced in this country.

O'REILLY: OK, so time, place.

HINKLE: They have Broadway shows with naked — with naked men and women and they do all the time, you can have "Hair." You can have.

O'REILLY: OK, so you do believe in time, place.

HINKLE: You can't do that.

O'REILLY: You do believe in time, place, and manner restriction? OK.

HINKLE: Absolutely. You can't sing the "Star Spangled Banner" at 3:00 a.m. outside the hospital.

O'REILLY: No, you're disturbing the peace. Now, in Portland, and I lived there, so I know this, many of the clubs, like Mr. Dacorsi, are in proximity to residences, OK, because Portland's a tiny town. I mean as far as the downtown area is concerned. There are high rises, there are people living in lofts, you know that, around the proximity of these clubs. Do you feel that's not time, place and manner, sir?

HINKLE: The Oregon — that was one of the provisions that was on the Oregon ballot. In 2000, the proposition was put to the people. Shall we allow zoning ordinances to keep adult businesses away from schools, away from churches and whatever, Oregon voters resoundedly rejected that, because they know that despite what people like you say, there has been in fact no effect on property values, no increase in crime, no.

O'REILLY: Why here in New York did they knock down all of these sex places and property values went through the roof? I mean right around the corner from where I'm sitting now, Giuliani knocked them all down and property values, you know, quadrupled in a month. So, look, I don't think you know what you are talking about.

HINKLE: There are a million reasons why property values in Times Square went up.

O'REILLY: But that's just a disagreement between you and I. OK, I think it's an intrusion on the people of Oregon, particularly in Portland. I think if you put a referendum tomorrow, do you want live sex shows in this state, it will be resoundingly defeated. And also.

HINKLE: Well, you're wrong.

O'REILLY: And also, I think it's time, place, and manner. I don't think the good folks — I think the god folks of Oregon were bamboozled and now it's coming home to roost. But I'll give you the last word.

HINKLE: Three times — three times they have upheld it and the law here is no different in California. You have the live sex shows down there; 2001, the California Court of Appeals supreme court said that's fine, so the law in Oregon is no different than it is in California.

O'REILLY: That's not what we understand, but we will look into it. All right, gentlemen, thanks very much, we appreciate it.

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