The Captain Cook Tavern has been put on notice by liquor bosses, who say the Cookathon is unacceptable and can't be allowed to continue in its present form.
The owners of the student pub say they will now meet with their lawyers to review the Liquor Licensing Authority decision.
Following last month's hearing of the renewal of the tavern's liquor licence, the Liquor Licensing Authority has decided to give the pub some breathing space, by adjourning the renewal for 12 months.
The University of Otago, police and the Otago and Southland Medical Officer of Health appeared in opposition to the licence renewal.
In the decision, Judge Edward Unwin said the Cookathon, in which about 500 people take part in an all-day drinking event up to three times a year, "is directly contrary to the [Sale of Liquor] Act's objective".
The adjournment was intended to see what happened during the next three potential events and what actions the company took.
"The effect of this decision is to warn the company that its continued association with the event, in its present form, will place the existence, or the conditions, of its licence at risk."
Company director Richard McLeod said "there was quite a lot in the decision" and time would be taken to work through it.
"We are going to be reviewing it carefully with our solicitor and taking steps to make sure we follow what's been asked of us."
The authority said evidence presented at the hearings showed the major issue about the event was the start time.
However, it also noted the company had done everything asked of it until now and it had displayed a responsible reaction to the evidence at the hearing.
If the event was to continue, it suggested the company dissociate itself from the event, not open until noon, not provide music early in the day and not provide barriers and portable toilets.
It believed "any sensible response" would require input from the university, the Otago University Students Association, the Dunedin City Council, the District Licensing Agency and police.
"It seems to us that the company must first decide whether to walk away from hosting such an event in any form, or sponsor the event at a much later time," the decision said.
The authority was also aware the event had become "something of an institution" and "it may take time and effort for the non-continuance of the event to become accepted".
DCC liquor licensing co-ordinator Kevin Mechen said the decision was "fair".
"I'm pleased they have got their licence. It would have been horrible if they lost it. You need the Cook. It's been part of the university for so long."
He believed the issue about the Cookathon was "easily solved" by not giving patrons a reason to turn up.
"If they do line up and nothing is there, that's the end of it."
