Police oppose the proposed expansion of the King Street Hotel, arguing it would have a "further detrimental effect" on the inner-city neighbourhood.
The city's largest nightclub has applied to City of Newcastle to expand into a neighbouring building now housing a pizza store and brothel.
Newcastle City Police District wrote to the council in December to oppose the expansion, which the owners say will give the venue a capacity of 1330 patrons.
The hotel is licensed for another 300 patrons at 10 events a year in an adjoining laneway, bringing the capacity to 1630, a number police described as "exorbitant".
"Police believe the proposed venue ... will significantly impact on crime," the police letter, signed by Detective Chief Inspector Scott Parker, says.
"There is a high likelihood of patrons wandering the streets intoxicated.
"The suburb of Newcastle is already overwhelmed with a large number of licensed premises ... there are 410 within the Newcastle City Police District."
The submission says King Street Hotel patrons were responsible for 28 per cent of criminal incidents at the nearby McDonald's restaurant between 10pm and 5am in the past five years, including a third of the 54 assaults.
The nightclub was among 12 NSW watering holes on Liquor & Gaming's violent venues list in the year to June 2018 after recording 13 violent assaults.
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It fell off the list in the following 12-month reporting period after the number of violent assaults dropped to eight.
"Although much can be read into area statistics, the actual King Street Hotel statistics show that under eight incidents have occurred per year at King Street since 2013 and the venue is currently not on any violence list available," the nightclub's application says.
The police submission describes these numbers as a "gross inaccuracy" and says the hotel has been on the "declared premises" list almost every year from 2010 to 2019 with between 12 and 22 violent assaults a year.
The hotel argues in its application that the higher number of patrons could reduce crime in the area due to increased foot traffic.
It says the expanded nightclub would respond to increased demand generated by population growth in the inner-city.
The police submission questions how the nightclub will disperse up to 1630 patrons "who will all be leaving within a short time frame".
"For the applicant to state there will be minimal effects on the amenity of the surrounding area is a gross inaccuracy," it says.
Liquor & Gaming is still considering a February 2020 liquor license application for the expanded premises.