I agree. Though, I understand why he just had him beaten. More of a warning to both him and especially Ginger. He understood they were childhood friends, and didn't want to do worse, especially if it would just make Ginger hate him more.
Really should have just had them both killed after she
kidnapped their child and later cheated on him with Joe Pesci's character.

You don't understand the kind of position Ace was in at Vegas. He handled ALL the money of the big mafia bosses. They wanted NO CONTROVERSY. AT ALL. Going out and killing his wife's lover would be controversy. He went way out on a limb to even have him beat up.
Remember what one character said when he was asked by the bosses if Nicky was fooling around with Ace's wife? He said something to the effect that the bosses would knock them all off for being so dishonorable and messy. If Ace hadn't been handling their money, they wouldn't have cared.

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He wasn't her pimp in the normal sensethey grew up together and were friends since childhood.

He never understood the absolute power hardcore pimps hold over their hookers.
Google "pimpology 101" (especially from FX's The Shield) and you'll see what I mean

I think in his bones Ace knew that Lester was the only reason Ginger even bothered living. If Lester went I think she would have cracked up much sooner.
Hey! You're not old enough to drink! Now go and die for your country!!!