Cover image courtesy of The Image Is Everything
The Supreme Court hearing between the Australian Turf Club and Racing NSW is a significant test of what the Thoroughbred Racing Act allows Racing NSW to do when it intervenes in the affairs of a race club.
The matter was argued over three days on 19 and 20 February, and 23 February 2026. Judgment is reserved, and a decision is anticipated in the coming weeks.
At the centre of the dispute is one provision of the Thoroughbred Racing Act 1996: Racing NSW may appoint “an administrator to conduct the affairs of a race club”. The Court is being asked to interpret what that power means in practice and, in particular, what limits apply when it is used.
The decision will be closely watched beyond the ATC. The Act provision applies to every registered race club in NSW, and it has been used before. Wyong was placed into administration in 2014, with a temporary administrator appointed pending a show cause process. Hawkesbury announced in December 2021 that an administrator had been appointed under section 14(2)(g), and its administrator later confirmed the club would remain under external administration “until further notice”. Other past administrations have also been cited in public reporting.
This case is different because of the club involved and the governance model at stake. The ATC is a member-owned club, governed through a board accountable to its membership. The Court is therefore being asked to consider how a statutory intervention mechanism operates in a member-based governance setting, and whether the Act allows an administrator to assume management functions normally exercised by the board.
It is also a rare case in NSW racing: a club with the scale and motivation to push the question into the Supreme Court in a way that requires a judge to define the practical limits of the administrator power. Whatever the Court decides will be read closely by clubs across the State.
What the Court is being asked to decide
The hearing dealt with three broad questions.
First, the meaning of “conduct the affairs” of a race club. The phrase is broad. A club’s “affairs” can include racing operations - race programming, staffing, safety and track management - but it can also include commercial strategy, contracts, assets, governance, and venue operations.
The Court is being asked whether the Act supports an administrator role that extends into the whole organisational life of a club, or whether the power must be construed more narrowly by reference to the Act’s functions and purposes.
Second, the boundary problem created by the wording. A narrow interpretation risks leaving the administrator power with limited practical effect in circumstances where Racing NSW says intervention is required. A broad interpretation risks a power that is difficult to confine, because many major club decisions can be said to affect racing operations.
Much of the hearing was directed to identifying whether the Act supplies a workable limiting principle.
Third, the corporate governance implications. Race clubs are commonly corporate entities with directors and constitutions. An administrator appointment only has practical effect if it transfers real decision-making power away from directors to the administrator.
The Court heard argument about what the appointment necessarily implies for the board’s management role, and how this statutory mechanism sits alongside ordinary corporate governance concepts.
The competing positions
The parties placed two different constructions of the Act before the Court.
The ATC’s position, in substance, is that Racing NSW is a regulator with significant oversight powers, but that the Act does not authorise an open-ended substitution of the club’s board and corporate governance.
The ATC contends that a broad reading of “conduct the affairs” would amount, in practice, to whole-of-entity management, and that the Act should be construed so that the administrator power remains connected to Racing NSW’s statutory functions without turning into a general management power.
Racing NSW’s position, in substance, is that the administrator power must be given real operation. Racing NSW contends that where a club’s circumstances threaten racing operations, integrity or stability, it is artificial to treat “governance” and “financial position” as separate from “racing”, because the ability to conduct racing depends on stability and functioning governance.
Racing NSW says the Court should be cautious about interpreting an express statutory power in a way that deprives it of meaningful effect in the situations Parliament intended it to address.
The Court has not made findings on the competing factual assertions; those issues remain in dispute. It also has not yet decided which construction is correct.
Why funding sits in the background of the case
The Supreme Court is not being asked to redesign NSW racing’s funding model. It is deciding the reach of a statutory power and the legality of a particular intervention decision. Even so, the dispute sits within a wider debate about how NSW racing is funded and what that means for club autonomy and financial dependence.
Those questions were central to the Rosehill inquiry. Witnesses described the post-2012 wagering environment as a turning point and argued that modern wagering-era revenues are collected centrally and then distributed through Racing NSW in a way that, in their view, leaves clubs more financially exposed. Racing NSW’s position in the inquiry record is that the system is part of the statutory and commercial framework for NSW racing, and that central arrangements underpin prizemoney and broader industry settings.
Those differing views matter here because they shape how each side describes the practical consequences of the current funding model, financial dependence and the context in which this dispute arose.
At the first Rosehill inquiry hearing in July 2024, trainer Gai Waterhouse told the committee that “the elephant in the room” was the funding of racing. In her evidence, she described a change in the revenue environment and argued that corporate online wagering revenue was not flowing to the ATC in the same way as traditional tote-related returns.
Gai Waterhouse | Image courtesy of The Image Is Everything
Waterhouse also expressed the view that funding settings and loans can give Racing NSW significant influence over clubs, and she connected that to the pressure surrounding the Rosehill proposal. Those were her claims to the committee, and they were contested in subsequent evidence.
At the same hearing, trainer John O’Shea linked the funding debate to facilities and long-term sustainability, referring to a maintenance and investment gap at the ATC and connecting the broader issue to the post-race fields funding environment.
The Rosehill inquiry also recorded direct questioning about the practical effect of centrally controlled funding.
In questioning to Racing NSW’s CEO, Liberal MLC Damien Tudehope the transcript records him asking whether clubs should have more control over funding arrangements rather than remaining dependent on central funding decisions. He returned to the theme shortly after, expressing concern about the concentration of decision-making power. The transcript records Racing NSW’s CEO responding that he did not accept that characterisation because its funding arrangements and intervention decisions are made for proper statutory purposes.
Damien Tudehope | Image courtesy of NSW Liberals
The exchange captures the competing views about dependence and autonomy: one view is that the model can leave clubs dependent on central allocations; the other view is that the model is part of how the industry functions and is applied for system-wide outcomes.
How the funding theme appears in the Supreme Court dispute
In the Supreme Court hearing, each side dealt with funding and financial context in different ways.
Racing NSW relied on figures and funding arrangements to support its position that the club’s financial circumstances were relevant to the intervention decision, including the proposition that some support is discretionary rather than guaranteed. Racing NSW says it was entitled to assess risk on that basis and to act for what it contends were proper statutory reasons.
The ATC disputed that approach. The ATC contends the funding position formed part of the context for the intervention decision in a way that, on its case, strengthens the need for limits on how far a regulator can go when it also controls key funding flows. The ATC also challenged whether Racing NSW’s reasons fairly described the financial material and scenarios relied upon.
One pressure point in that dispute is the way “discretionary” funding is characterised. Racing NSW’s position is that certain support is not a guaranteed entitlement. The ATC contends that where clubs are dependent on centrally controlled allocations, it can increase the funder’s influence over club decision-making and intensify governance disputes.
The Court has not decided those issues. They will be addressed in the reserved judgment as part of the legality and scope questions before it.
The Court’s role and Parliament’s choices
In questioning during the hearing, Justice Kunc repeatedly returned to the Court’s task: interpreting the statute Parliament enacted and applying administrative law principles to the decision under review, rather than redesigning the policy framework.
He also returned to Racing NSW’s role in money flows and distribution arrangements is a feature of the NSW statutory model that Parliament chose to build into the scheme, and that the Court’s task is to interpret what that means for the reach of Racing NSW’s powers.
Justice Kunc | Image courtesy of Legal Services Court
That focus adds context to the policy debate now running alongside the case. If funding settings are treated as a legislative design issue, then the forum for changing them is ordinarily Parliament or government policy, not the Court.
However, the current review of the Thoroughbred Racing Act excludes funding arrangements, and that backdrop has become a central point of reform advocacy.
The Racing Reform Group has positioned itself around a reform agenda that explicitly includes the funding model, alongside governance reforms and stronger checks and balances.
Attunga Stud’s Brian Nutt, the group’s secretary, has been blunt about the group’s starting point. “The reason why we formed this group was that we were disappointed that the terms of reference… did not include the funding model,” he said. He has also said, “We strongly believe that the Act is not fit for purpose any more.”
Nutt has framed the issue as a model built for a different wagering era, and as a management problem for race clubs.
“The funding model is outdated because it was established back in the day when the TAB controlled most of the turnover,” he said. “It’s very hard to budget when you’re a race club when you’ve got to rely on that sort of (discretionary) funding.”
The terms of reference for the Government’s review of the Thoroughbred Racing Act make it clear that the review does not include the Act’s industry funding arrangements, including the totalizator distribution arrangements in Division 3 of Part 2A. The Government’s consultation material repeats the exclusion.
The effect is a clear separation in the formal reform process: governance and powers are reviewable, but funding arrangements are out of scope. That is one reason the Supreme Court case is being watched closely. While the Court is not deciding the funding model, it is deciding the limits of a statutory power that operates within that model.
What the judgment is likely to do
Most reserved judgments in statutory power cases of this kind do two things: they decide the dispute in front of the Court, and they set out a framework that guides how the power can be used in future.
One possibility is that the Court upholds Racing NSW’s capacity to appoint an administrator in principle, but construes “conduct the affairs” by linking it tightly to Racing NSW’s statutory functions. That would preserve the power while making clear it is not a general licence to assume control of every aspect of a club’s corporate life.
Another possibility is a narrower outcome focused on the legality of the particular decision rather than the full outer limits of the power. Courts often resolve judicial review disputes by focusing on whether the decision-making process was legally sound, including whether any material misunderstanding or unreasonable step mattered to the outcome.
A third possibility is that the Court places significant weight on the corporate governance issue and concludes the administrator mechanism cannot operate in a way that effectively displaces directors and a member-based governance model without clearer legislative direction. That could narrow the practical operation of the power, or require clear limits on how an administrator can operate alongside the board and constitution.
Less likely is an extreme outcome that either empties the power of practical content or treats it as effectively unlimited. Courts generally avoid constructions that render an express power meaningless and they are also cautious about interpretations that confer open-ended control with no workable boundary.
What it may mean in practice
The Supreme Court is deciding a statutory power question and the legality of a particular intervention. It is not writing funding policy, but even so, the consequence of its ruling will be felt in the existing NSW racing structure, including the relationship between Racing NSW and clubs that depend on central allocations.
Judgment is reserved. When it arrives, it will provide significant judicial guidance on a power that applies across NSW racing.
