It is interesting what (if any) exemptions are mentioned. This is Bath.

http://212.158.27.91/BathNES/environment/Licensing/LicensingAct2003.htm

What are some of the key exemptions in the Act?
 Live music at small premises (Section 177) – Where there is musical entertainment at premises which have a permitted capacity of not more than 200 persons and are used primarily for the supply of alcohol for consumption on the premises, only licence conditions relating to either crime and disorder or public safety apply to that musical entertainment i.e. those relating to protection of children from harm or public nuisance do not apply to the musical entertainment. However, if there is a review of the licence then the exempted conditions can be applied. Where there is a performance of live music between 8am and midnight (and no other form of regulated entertainment) at such premises then no licence conditions can apply with regard to the musical entertainment unless there is a review of the licence.
 Place of Worship (Schedule 1, Part 2 Exemptions) – Premises such as churches do not require a premises licence for activities which would otherwise be classified as 'regulated entertainment' taking place at the church.
 Garden Fetes, etc. (Schedule 1, Part 2 Exemptions) – Entertainment provided at a garden fete, or similar event, is not 'regulated entertainment' and thus requires no licence.

I have seen no specific reference at all to Entertainment facilities.

5.18 of the Guidance states: It will ultimately be for the courts to decide whether music is "incidental" in the individual circumstances of any case and concludes: But there are likely to be some circumstances which occupy a greyer area. In cases of doubt, operators should seek the advice of the licensing authority, particularly with regard to their policy on enforcement.

It is quite obvious that no one wants to touch this with a barge-pole and local authorities will want to hang-on to the courts 'ultimately deciding' but we should not let them off the hook. The guidance says to ask them and refer to their policy. It is this that will later be challenged or accepted in the courts.