The cabaret license is one of New York City's bizarrely bureaucratic necessities for running a nightclub, bar or similar establishment in Manhattan, Queens, the Bronx, Brooklyn or Staten Island. Basically, it's a license which permits the patrons of a nightclub to dance. Without the license, a nightclub can be raided and shut down (and they often are) if police officers find patrons dancing anywhere on the premises, however it's the owners of the place that get in trouble, not the patrons, if no license has been issued.
The City of New York defines a "cabaret" as "...[any] room, place or space in the City in which dancing is permitted in connection with the restaurant business or the business of directly or indirectly selling food or drink to the public." This is according to Title 20, Subchapter 20 of the New York City Administrative Code. Any establishment caught violating the cabaret law is subject to fines, raids, lots of red tape, and getting its doors padlocked by the city.
The cabaret license, now largely obsolete but still maintained by the bureaucrats, first came into being in 1926, during Prohibition. Its original purpose was to prevent excessive lines outside of nightclubs and to fill all available space inside a nightclub if there were people waiting outside to get in. During the Giuliani years, it was an administrative cause to shut down "disreputable" places that the mayor and his moral task force didn't approve of. This is how Giuliani shut down most of the strip clubs around Times Square and a good chunk of the rave clubs like the Tunnel (for a few months in 1998) and Twilo (permanently shut down in 2001).
In late 1998 I was at the Pyramid on Avenue A, which didn't have a cabaret license but hosted several goth/80s dance nights where everybody danced all night long. One night a dozen or so NYC police officers burst into the place and made everybody leave (You don't have to go home, but you can't stay here!), and the Pyramid was closed for several weeks afterwards. It eventually reopened with a cabaret license for the upstairs dancefloor, though they didn't get one for their basement lounge. Therefore a warning light of sorts was installed downstairs, and whenever it was illuminated, that meant that cops were upstairs, so everyone downstairs would stop dancing, thus avoiding the City's persecution.
The NYC Department of Consumer Affairs handles the issuing and revoking of cabaret licenses. Only places with a maximum capacity greater than 74 can apply for a cabaret license, otherwise none is needed. Other exceptions to the law are private organizations/clubs/societies, any religious, charitable, elemosynary or educational corporation or institution, or any place that was operating as a "cabaret" prior to January 1, 1926, which is when the cabaret law went into effect. Such establishments were allowed to continue acting as cabarets due to a grandfather clause in the law.
The full text of NYC's cabaret license application can be found at the following URL:
http://www.ci.nyc.ny.us/html/dca/html/cabapp.html
Despite the wealth of seemingly pointless laws in all areas of the USA, and indeed, around the world, this one has really had me scratching my head over the years. A license to dance?