‘Three Strikes’ licensing is out: how the new ‘Demerit Point Scheme’ works

From 1 January 2021 Liquor & Gaming NSW’s new Demerit and Incentives Point System (‘DIPS’) has been in place. The DIPS replaced the ‘Violent Venues, Three Strikes and Minors Sanctions Scheme’ (‘Three Strikes Scheme’).

What has changed from the old Three Strikes Scheme?

This is a fundamentally new approach from Liquor & Gaming NSW to encourage compliance with licensing legislation by using both ‘the carrot and the stick’.

The intention of the DIPS is to reduce serious alcohol-related violence and repeated non-compliance with the Liquor Act 2007 (NSW).

The DIPS actively encourages compliance by providing financial incentives for licensees who consistently comply with their obligations under the Liquor Act.

Alternatively, those licensees who repeatedly fail to comply can expect to face an increasingly severe array of penalties by way of the imposition of demerit points.

What offences result in a demerit point?

“Demerit point offences” are the usual types of offences covered by the Three Strikes Scheme and include the following types of breach of the Liquor Act:

• permitting intoxication on the premises;
• supplying liquor to an intoxicated person;
• sale of liquor outside of approved trading hours;
• breaching a condition of a liquor licence;
• permitting any indecent or quarrelsome conduct on the premises;
• engaging in conduct or any activity or promotion that results in patrons engaging in irresponsible, rapid, or excessive consumption of liquor;
• failure to comply with a closure order;
• other breaches of the Liquor Act.

There are two ways a venue can receive a demerit point under the DIPS:

(1) automatically accrued, which are received for:

(a) committing a serious offence; or

(b) failing to provide a safe environment for patrons.

(2) where it is imposed by the Independent Liquor and Gaming Authority (ILGA) where ILGA believes a ‘Prescribed Complaint’ has been made out.

A ‘Prescribed Complaint’ can be made by either Liquor & Gaming NSW or NSW Police where they believe conduct by patrons that occurs on or nearby, or in connection with, the licenced premises where;

• intoxicated persons are frequently seen; or
• violent acts towards people or property have frequently occurred;
• two or more serious indictable offences have been committed within 12 months;
• two or more incidents that pose a serious risk to the health and safety of persons have occurred within 12 months;
• the types of conduct listed above.

Who incurs the demerit point?

Registered clubs are dealt with differently under the DIPS compared with other liquor licence types.

If a registered club breaches its obligations under the Liquor Act, the demerit point will be recorded against the club licence, as opposed to being recorded against the licensee/registered secretary of the club.

For example, if an approved secretary of a registered club incurs a penalty notice for permitting intoxication on the premises of the club, Liquor & Gaming NSW can issue one demerit point against the club licence.

For a restaurant with an on-premises licence that is guilty of the same offence, the licensee or the approved manager that has committed the offence will incur the demerit point themselves, as opposed to the on-premises licence incurring the point.

A demerit point can remain in force for up to three years.

Penalties from receiving a demerit point

Similar to how demerit points work in relation to a drivers’ licence, the DIPS provides an escalating scale where greater penalties are imposed for each demerit point incurred:

1 demerit point can result in:

• a reprimand of club secretary or licensee and/or require them to undertake further training;
• the imposition of a licence condition considered appropriate to address the non-compliance;
• 40 fee units being added to a venue’s annual liquor licence fee.

2 – 3 demerit points can result in:

• the same penalties as available for 1 demerit point; and in addition
• heightened monitoring and supervision of your venue to ensure compliance;
• 40 fee units added for EACH demerit point incurred.

4 or more demerit points can result in:

• the same penalties as available for 1 demerit point; and in addition
  disqualification of the licensee or club secretary, as applicable;
• 40 fee units added for EACH demerit point incurred.

Although a demerit point can be recorded for up to three years, any licence conditions (or any other remedial action taken) that may have been imposed as a result of the demerit point will remain despite the lapsing of three years.

If a licensee or an approved manager can demonstrate that they (and the venue) have ceased the offending conduct and taken positive and decisive steps towards compliance, a demerit point can be removed upon application to ILGA after 12 months.

Double Demerit Point Offences

Selling or supplying liquor to a minor, or allowing such sale or supply to occur on a licensed premises will attract double demerit points against the liquor licence or the licensee.

Additionally, ILGA has the ability to enforce double demerit points if it finds a venue guilty of a ‘Prescribed Complaint’.

What happens to ‘old strikes’ issued under the Three Strikes Scheme?

Any strikes that were incurred by a club secretary, an approved manager or a licensee under the old Three Strikes Scheme have been revoked. Remember, the revocation of the strike does not affect the operation of any remedial action taken by ILGA as a result of the strike (e.g. any imposed licence conditions will remain in force).

Discounts on Licensing Fees

Compliant licensees are rewarded under the DIPS as they are entitled to receive discounts on the annual renewal of their liquor licence on a sliding scale.

For example, a club that complies with all licensing legislation for the next 5+ years will be entitled to a discount of 10% from the annual liquor licence fee.

Similarly, a club with a clean record for 3 – 5 years will be entitled to a 5% discount on the annual liquor licence fee.

How can we help?

If your club or hospitality venue has received a demerit point for an alleged breach of the Liquor Act, or you would like our advice in relation to compliance or to explore your available options to dispute a demerit point, please do not hesitate to contact our Clubs team.

Further Information and Contact Details

For advice in relation to the DIPS, please contact any member of the Clubs team on 8251 7777 or by email:

This Newsletter is produced by Pigott Stinson. It is intended to provide general information only. The contents of this Newsletter do not constitute legal advice and should not be relied upon as legal advice. Formal legal advice should be sought from us in respect of the matters set out in this Newsletter. Liability limited by a scheme approved under Professional Standards Legislation.