Scottsdale- Scottsdale voters apparently handed the city’s two strip clubs a victory Tuesday by overturning a City Council decision to further regulate the businesses. Proposition 401 was losing by more than 1,300 votes, with an unknown number of early and provisional ballots left to be counted, according to preliminary results released Tuesday night.

The apparent defeat of Proposition 401 – a “no” vote was one against the tougher regulations – means the current rules will remain in effect for Babe’s Cabaret, which is partially owned by adult film mogul Jenna Jameson, and Skin Cabaret, owned by local businessman Todd Borowsky [pictured left].

Club owners said the new regulations, which would have required a distance requirement for topless dancers and banned lap dances, would have driven them out of business.

The clubs gathered enough signatures to force a referendum on the changes the council approved in December, shortly after Jameson announced she was part owner of Babe’s.

“This is 100 percent on (Mayor) Mary Manross,” Borowsky said. “It was her pet project to do it this way. She did not want to listen to the businesses.”

While patrons at Babe’s cheered when television news stations showed the club leading at the polls, Yes on 401 supporters declined to concede and said voters were confused and provided with misinformation.

Mayor Mary Manross, who arguably was the leading proponent of the new regulations, said there were a variety of reasons for the vote – confusion over what a “no” vote meant, the wide gap in campaign spending and the spreading of incorrect facts about the council’s process of approving the new rules. She did not see it as a vote against the council.

“There was an enormous amount of misinformation and false information circulated by the two businesses,” Manross said. “It was very difficult for any organization or community to combat that.”

Manross said the council will discuss its next step once the final results are in.

There were 19,223 early ballot requests among Scottsdale voters, with 8,581 counted as of Tuesday night. The No on 401 side was ahead on early ballots by seven votes, 4,294 to 4,287. It’s unknown how many early ballots remain to be counted, Scottsdale City Clerk Carolyn Jagger said.

“We remain cautiously optimistic but we understand the numbers,” said John Nichols, chairman of the Yeson401.com coalition.

Nichols said he respects the voters, but also chalked a lot of the results up to confusion.

“I talked to any number of voters that thought a ‘no’ vote was a positive vote for us and may have misunderstood,” Nichols said.

Scottsdale residents who voted “no” told the Tribune their decision was primarily based on the City Council’s handling of the situation and the belief council members should not be overregulating business, even ones they may not personally support.

“I didn’t want Big Brother legislating morality,” said Roc Leatherbury.

The voters who supported the stricter regulations told the Tribune the clubs were the type of business that justified the council’s actions.

“Usually I support free enterprise, but I guess this time I made an exception,” Linda Weber said.

The campaign became a battle between the clubs and local churches and neighborhood activists. The Yes on 401 coalition, led by the Christian conservative Center for Arizona Policy, couched the election as a vote for morality, safety and the city’s quality-of-life. They collected less than $7,000, according to the last campaign finance statement, but had a number of high-profile endorsements from politicians and church leaders.

The No on 401 group – which was basically limited to Babe’s and Skin and had well in excess of $200,000 in contributions – said this issue was not about whether voters like strip clubs, but whether a City Council has a right to change the rules to hurt an existing small business.