Over the past two decades, considerable growth in commercial cetacean-based tourism has exposed coastal cetacean populations to high vessel density. Since 1989, Port Phillip Bay, Victoria, Australia, has hosted a thriving dolphin-swim tourism industry comprised of three licensed vessels. This study assessed the effectiveness of the Ticonderoga Bay Sanctuary Zone, a protected area enacted under the Wildlife (Whales) Regulations 1998, to serve the resident dolphins as an area of ‘respite’ and ‘refuge’ from anthropogenic stress, including commercial tourism. Research was conducted onboard 104 dolphin-swim tours, with both tour operation and dolphin school behaviour recorded using a combination of continuous observations and 1-min scan samples. During all observed encounters within the sanctuary zone, tour operations contravened the site-specific minimal approach distance regulation. By also contravening generic permit conditions (compliance range 0–70%) to the level of unsatisfactory compliance consistent with that documented outside the sanctuary zone, tour operations did not exercise any additional caution during a dolphin encounter within the sanctuary zone. Recommendations for this industry include a shift from sole reliance on passive management strategies to a judicious management plan that includes enforcement to support the governing regulations.