Even if ultimately you would be cleared of any negligence should a child be injured on your property, without a doubt you will be sued by the parents.  And I think that if you know that the tenant is operating the business without a license and the proper insurance required, you run the risk of having your insurance company disclaim defense and indemnification.  In other words: coverage.  I am sure that the business is in violation of your rental agreement.  I would seek help from an attorney to send a cease and desist letter and to start eviction proceedings thereafter should she or he fail to  end the business. Good luck to you.