A committee in Stratford-upon-Avon granted a licence to hold the Bulldog Bash 2008, although police had submitted a formal objection to the organisers’ application.
On August 12 last year, Hells Angel member Gerry Tobin was shot dead on the M40 after leaving the long-running motorcycling event.
Organisers were granted an annual licence for the event, held in Long Marston, Warwickshire, to cover this year’s planned August festival and last until 2018.
Members of the public applauded as the decision was announced. Councillor Gillian Roache, chair of the licensing committee, told the hearing: "We are of the view that we are dealing with licensed premises and licensable activities and their immediate vicinity."
She said the tragic death of Mr Tobin did not occur in the immediate vicinity of licensed premises.
The Bulldog Bash licence was granted subject to conditions including random searches on the site, the use of metal detectors, and set numbers of accredited security staff at entrances on the site.
John "Bilbo" Britt, licensee for the event, said he was "relieved and pleased" by the decision.
He said: "I thought the police evidence against us was hysterical but we are very willing to work with police in the future.
"I can understand their problems and we will work very hard with them to make this event as safe as we possibly can."
He said the conditions attached to the licence will cost organisers "extra money" but were "common sense".
Explaining the committee’s decision afterwards, Coun Roache said: "What goes on miles away from the premises is not the responsibility of people running operations on the site.
"The licensee is not responsible for activities beyond the perimeter of the premises - that’s a police responsibility."
Several men are due to stand trial in October for the murder of Mr Tobin, the panel heard during the two-day hearing.
In a statement, Warwickshire Police’s Assistant Chief Constable, Bill Holland, said: "Warwickshire Police lodged an objection to a licence being granted for Bulldog Bash because we firmly believe that public safety could be compromised by this event.
"Warwickshire Police has a duty of care to the public and the force will give the council’s decision careful consideration before commenting further."
Earlier Inspector David Patterson, of the operations planning unit, said: "The view of the police is that the only safe way to ensure public safety is that the event shouldn’t go ahead at all."
He said that to police this year’s Bulldog Bash – the 22nd – in an appropriate way would cost £1,940,000.
The festival, which the committee heard is associated with the Hells Angels motorcycling group, boasts on its website of drag racing, wrestling, live bands and a "topless bike wash".
In 2001 a Canadian man survived after being shot three times in the leg after leaving the Bulldog Bash, while in 1998 the festival faced a bomb threat.
The committee also heard that organisers of another motorcycling event, the Rock and Blues Custom Show in Derbyshire, cancelled this year’s festival after police voiced concerns.
And on Wednesday it was announced the Welsh National Motorcycle Show, due to take place later this month, has also been cancelled amid police fears of a "significant risk of violence".
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