The Golden Sheaf Hotel in Double Bay has been fined $5,500 by Liquor and Gaming NSW.
The inspection of the hotel which resulted in the fine was triggered when Twitter user Scott Rhodie reposted an image he'd seen on Reddit.
Acting Director of Compliance for Liquor & Gaming, Dimitri Argeres said of the fine, "We need to send a clear message to this business and others that if you are not doing the right thing you will be held to account and we will escalate our enforcement actions for those who put the public at risk."
"We want businesses to stay open and continue to trade and while we all need to accept that operating a business is a different prospect now, in all circumstances it must be conducted responsibly to protect the public from the risk of COVID-19 infections."
Federal MP Dave Sharma got in on the action and reposted the Tweet saying the queues were "not okay".
Another person wrote, "How many days until Sydney is locked down?"
"How Many Days Until Sydney Is Locked Down?"
In a statement, CEO of the Solotel Group, operator of The Golden Sheaf, said "Reports of The Golden Sheaf offering discount drinks promotions on Wednesday night are false.
"We have not offered social media drink promotions since the start of COVID.
We are practising strict social distancing and COVID hygiene and safety procedures. We abide by NSW Health Guidelines throughout all of our venues, including the Golden Sheaf. All of our staff are inducted into the new COVID hygiene practices as a mandatory.
"We take the safety of our guests and staff very seriously, which is why we will now be taking bookings only on Wednesday nights from 8pm and we will be employing extra staff and security to ensure social distancing is adhered to and we have a maximum of 20 people in our queues at any one time.
"We employ management and security staff to monitor queues constantly – at the Golden Sheaf last night we worked immediately with police to disperse the crowd and ensure social distancing measures were established.
"It is the collective responsibility of all staff, guests, operators and authorities to ensure the safety of each other."
There was no reference to the circumstances which permitted the high-density queueing captured by the Reddit user.