Third Reich Ruins | 14156
They did not. None of the laws were relaxed, but an instruction was sent out that there were to be no arrests without prior permission, that was all. Instead, anyone who could have caused trouble at the Olympics was rounded up and interned for at least the duration of the Games, unknown to the foreign Press and athletes competing in the 1936 Games.
The United States Holocaust Memorial Museum has a thorough article about the 1936 Olympics which is well worth reading.
In August 1936, the Nazi regime tried to camouflage its violent racist policies while it hosted the Summer Olympics. Most anti-Jewish signs were temporarily removed and newspapers toned down their harsh rhetoric. Thus, the regime exploited the Olympic Games to present foreign spectators and journalists with a false image of a peaceful, tolerant Germany.
Ignorant of what was happening to people in Germany, a number of Jewish athletes from around the world, competed.
As most did not fully grasp at the time the extent and purpose of Nazi persecution of Jews and other groups, these athletes chose to compete.
And here is the killer bit as far as the LGBTI community is concerned.
The Nazis made elaborate preparations for the August 1–16 Summer Games. A huge sports complex was constructed and Olympic flags and swastikas bedecked the monuments and houses of a festive, crowded Berlin. Most tourists were unaware that the Nazi regime had temporarily removed anti-Jewish signs, nor would they have known of a police roundup of Roma in Berlin, ordered by the German Ministry of the Interior. On July 16, 1936, some 800 Roma residing in Berlin and its environs were arrested and interned under police guard in a special camp in the Berlin suburb of Marzahn. Nazi officials also ordered that foreign visitors should not be subjected to the criminal penalties of German anti-homosexuality laws.
The article also reminds us that boycotts were organised but were ineffective. It also highlights poor writing and checking among journalists who should know better.