I have started the process by sending your site administrators a note and by informing the following sponsors by mail and by phone. This is a serious matter since you are sending a wrong message to the kids on this site -- people can curb whatever you want to say is the message you are sending. I am sure your policies have never been reviewed by a lawyer otherwise you wouldnt be in this shape.
Dont be under the impression that because it is a "private" website you can do whatever you want to! There are some basic laws that apply to all. It is similar to saying, it is my house so I will make MURDER legal!!! It does not work.
I have now contacted 7 businesses that I found as Advertisers on your site. I will continue to report to anyone I see and I will send this to the ACLU explaining the stupidity of the matter.