Did I Overreact at Work? TW: sexual harassment..?

I have no idea where to post this, but I just need to know if I did the right thing.

I work at a cafe in a ‘club’ - not the alcohol kind, a club with a gym, tennis courts, pool, kids area that sort of thing.

Yesterday at 4pm all the kids come to the cafe area to get fries, milkshakes and the sort...all aged from like 5-14 years old. About 15 of them were there.

There’s this guy who has a membership that I assume is mentally challenged or impaired in some way, I’ve never seen him make a scene or anything. He’s just a little strange - sits with his bare feet up, stares off into space, scribbles nothing in a notebook. Never thought much of it, he’s there most days to order dinner and stays for hours.

He was there as usual, and the kids are all around talking and running around. Then a lady comes up to me with a baby strapped to her and says “just thought I’d let you know that man over there is touching himself”. I am SHOCKED. I take a glance and sure enough, yep. She’s right. I immediately bump into my manager and let her know what’s going on.

She goes up to him and says “WHAT’RE YOU DOING?” Then sits and chats with him for about 20 minutes. I get back to work and go around collecting plates and sure enough, he’s sitting there on his own again??

My manager says “he’s been told he has one strike then he’s out”.

I am LIVID. I can only sympathise so much with whatever is happening in his head, but to masturbate in front of kids...I think the police should’ve been called, and management should have banned him and kicked him out not just a slap on the wrist.

After my shift I called the police and let them know the man is still there and they said they’d send someone over to check things out.

I talked to some other staff and apparently he’s had reports/complaints about staring at kids, lighting a book on fire in the middle of the cafe and another girl said she was driving and saw him run every red light just laughing to himself...

I have work on Thursday so that’s all I know for now, I’m just pissed at how the situation was handled. I have no doubt I’ll have to serve him again and I will feel EXTREMELY uncomfortable. Letting him continue to come in with little punishment for doing that will potentially lead to him luring a child and abusing them, scarring that kid for the rest of their life.