Galloping clubs could lose up to $1 million from their payouts next season.
Racing Industry Board racing and business analyst Tony Severinsen has confirmed discussions are taking place with New Zealand Thoroughbred Racing officials to decide how to implement cuts.
Harness racing and greyhound codes are not affected, despite the TAB's big decline in turnover this season.
Severinsen said the indications were that the TAB would still be able to meet the agreed payout of 8.225 per cent to clubs.
The problem was that the payout to galloping clubs had crept up to almost 8.5 per cent, because of an imbalance of meetings.
"When the galloping code has cut back its meetings in recent seasons, the number of premier and feature meetings has basically stayed the same.
"The funding policy depends on an even spread but the scale has been tipped towards the top end," he said.
One of suggestions is that the payout for all galloping meetings be cut by 0.25 per cent, equating to about $1 million overall.
Thoroughbred Racing chief executive Allan Fenwick said clubs had been warned but other options were still being considered.
Meanwhile, TAB turnover has slumped dramatically and is running $11.5 million behind last year, at $852 million.
Its turnover on racing topped $1 billion for the first time last year but looks certain to fall short by three or four million this season.
The galloping code has been the worst affected, with its turnover of $336.4 million down $18 million on last year because there were 133 fewer races.
The harness code, which has had only 10 fewer races, is down $4.9 million to $200.1 million and greyhounds, with 100 extra races, are holding their own at $70 million.
Overseas betting continues to be the growth area, with Australian gallops, with 50 extra races, increasing by $6.1 million to $211.6 million and Australian harness, with 140 extra races, going up $7.2 million to $21.2 million.
TAB analyst Paul Collins said reducing horse numbers continued to be the main problem with New Zealand racing.
- NZPA
Racing: Clubs in danger of losing $1 million
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