As debate rages over Sydney's controversial lockout laws, another popular inner city bar is set to close, its demise blamed in part on a drop in night-time trade.

Bar Century, guises of which have held licences in the same George Street spot since 1940, is to close after an untenable rent increase and the "contributing factor" of NSW state government drinking regulations, said manager Cavan Pugh.

"There's definitely a downturn, there is no denying that. During peak times, numbers aren't as high as they used to be," he said.

With a long-standing closing time of 1:30am, the home of the $4 beer is not directly affected by the 2014 legislation. Between five and 10 staff are yet to learn whether they will remain employed by parent company Oscars Hotels.

Duty manager Kiran Gurnani said that while business had remained strong, "there's a definite decrease in foot traffic" in the area.

"There's just straight up not as many people on the street as there were. Weekends in the city are just not what they used to be," he said.

Known for its sticky walls, bad smells and drinks with prices straight from the 1990s – its famous $3 vodka raspberries went up to $4 two months ago – the bar has for many years been a stop for revellers before and after seeing gigs at the Metro nightclub. A post announcing its imminent closure on Facebook garnered over 1900 comments from patrons expressing their bewilderment at losing the "great establishment."

A Development Application submitted to the City of Sydney shows plans for a floor of "electronic gaming machines" in the four-storey property above Hungry Jack's restaurant, which is also leaving the premises.

Staff at Bar Century said they feared the famous night time spot was making room for a "pokies den", but a spokeswoman for Karbon Property, which managed the lease, said the new leaseholders, City Heroes, had no designs to bring gambling machines to the prominent venue.

Bar Century's art deco home is instead slated to be given a refit that is a first for Sydney, combining a nightclub with "virtual gaming". On a floor above and as part of the same gaming venue, an 80-person capsule hotel, as are common in Tokyo, is proposed for the outgoing World Square Backpacker hostel.

Lockout law exemptions for gambling venues in Barangaroo, which will open a mega casino in 2020, and at Pyrmont's Star casino, which falls outside the CBD's 3am closing zone, have been the subject of intense scrutiny after anti-lockout law campaigners zeroed in on the inconsistency of the state legislation.

Businessman Matt Barrie's sensational essay, Would The Last Person in Sydney Please Turn The Lights Out, last week went viral and triggered outrage over the "death" of Sydney's vibrant night time economy at the hands of what he claims to be poorly thought-out policy.

A Facebook post by Premier Mike Baird was on Tuesday slammed for quoting skewed statistics in support of the law's effects on lowering the number of alcohol-related assaults in Kings Cross.

Adding to political fallout, Freelancer.com chief executive Mr Barrie on Friday said that the City of Sydney opposed the controversial lockout laws.

"Just met with @cityofsydney CEO Monica Barone. She said that CoS is AGAINST the lockout, just wants @mikebairdMP to provide 24x7 transport", he tweeted.

Bar Century, which will pour its last cheap beer on February 27, intends to go out with a smile and in its usual non-violent manner, said Mr Gurnani.

"I've worn a hula skirt and coconut bra on shift before. It's always been such an upbeat bar, we've never had any trouble, it's always good fun. People here are friendly – you can come here and chat with a stranger."