I'll let the Detroiters set it straight, but as I understand it,
cabarets evolved out of speakeasies after Prohibition.  When alcohol was
legalized again, they went legit but kept up the jazz band tradition that
had grown up in that environment.  As the decades have gone on,
eventually DJs supplemented the bands.  I gather a cabaret these days
*could* mean a strip club, but not exclusively.  

http://detnews.com/2001/entertainment/0109/30/c01-304935.htm
http://www.ipl.org/exhibit/detjazz/Stompin.html
http://www.lilytomlin.com/reviews/time_mag_1977.htm
http://www.submerge.com/electrofunkjoinssubmerge.htm

By the way, nightclub laws are often known as "cabaret laws," and not
just in Detroit:

http://www.mml.org/pdf/detadul.pdf


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