I have watched a few games where the Tasha's hideous laughter spell has been used before and the DMs there didn't count the creature completely out of the fight. For example: A player next to affected creature ran away after casting successfully, DM gave the Bandit an attack of opportunity with disadvantage due to the spell saying the creature goes prone.
We basically had the same scenario and I ran with that idea but the bard argued that the target was incapacitated as in the description.
What do the rules say is the correct way to handle this?
TLDR: If a creature is prone, e.g. due to Tasha's hideous laughter, can it still make opportunity attacks if an adjacent foe moves away from it?