Roger Brett, 55, advertised the Garden of Eden club on the Internet as an attraction for "liberated adults" - and attracted visitors from across Britain.
But one female visitor was "shocked and embarrassed" to see up to 20 people having group sex in a swimming pool, magistrates at Cardigan were told.
Brett, a married man and the father of two children, admitted living off immoral earnings and operating a brothel. He was fined a total of pounds 2,000 and ordered to pay pounds 40 costs.
Maggie Hughes, for the prosecution, said: "One woman tipped off the police after visiting a mixed night at the club with her sister."
"Shocked and embarrassed", the woman spent the rest of the evening sitting in a car outside the club. She later went to the lavatory and saw a group of people "frolicking" in the swimming pool. Ms Hughes said: "She saw between 16 and 20 men and women who were naked and having sex together."
The woman complained to police when she arrived home.
Brett was interviewed by police and admitted running the club at Nevern, Pembrokeshire, as a brothel. He told police that he bought the garden centre 10 years ago but the business fell on "hard times".
Ms Hughes said: "He [Brett] decided to venture into the naturist scene. But he told police that people wanted more excitement and he turned a blind eye to what was going on. He said he had acted on the advice of solicitors and didn't think he was doing anything wrong."
The court was told that Brett did not "actively encourage" people to have sex.
Emma Smith, for the defence, heard that Brett's income from the sex club was pounds 150 a week. She said: "He now accepts that what he did was illegal but he never intended to flout the law.
"He has been married for 33 years to his wife Audrey and they have two grown-up children. His business has dwindled to nothing. He has lost his business and is planning to sell the business and intends to return to Kent, where he has friends.
"He has an army pension of pounds 500 a month. He has not made a great deal of money from the business and has lived off the pension. He has lost his good character."Reuse content