The Dunedin City Council, which has made clear the event is not welcome in the city, will make a decision on the ban on Monday.
But city environment general manager Tony Avery said yesterday apart from the ban, there was little the council could do to stop the event.
Last year, disorder at the Undie 500 resulted in police in riot gear gear being pelted with bottles, fires being lit, and 69 people arrested.
Earlier this month, the University of Canterbury Engineering Society (Ensoc) pulled out of organising the event, warning without the support of local authorities it might be forced underground.
Third-year commerce student Thomas Watson, of Canterbury University, said he planned to run an alternative event, which he called Trek 08, and was unlikely to liaise with local authorities.
The council's planning and environment committee will on Monday debate a staff recommendation the liquor restriction, an extension of the central city ban on carrying open bottles of alcohol or consuming alcohol in public places, be put in place during August.
It would only take effect from 7pm on the Friday of the event to 7am the following Monday, but it needed to be available any time during the month because there was uncertainty about when the event would take place.
Dunedin area commander Inspector Dave Campbell requested the temporary ban in a letter to the council in June.
A "reliable informant" had told police the event would go ahead in some form.
Participants last year were aware of areas in North Dunedin the liquor ban was not in force, and they "migrated to those areas as the evening progressed".
"These incidents received significant national and international media exposure, which reflected poorly on the University of Otago and the city of Dunedin," Insp Campbell said.
Council liquor licensing and projects officer Kevin Mechen said in a report to the committee the "underground" event was understood to be planned for August 22.
"The temporary restriction will send a clear message that, while the city encourages a lively atmosphere, it will not condone the alcohol-related disorder that is associated with events such as the Undie 500."
