Following a tip-off from a member of the public, police found the Toyota Land Cruiser towing the hired trailer at a service station in Gladstone Rd, Mosgiel,just after 2pm on Tuesday.
"We didn't know there was anyone in there," Constable Jacqui Ballam, of Mosgiel, said.
Opening the enclosed trailer, she was surprised to discover 21 students with "different levels of intoxication" inside.
The trailer could only be opened from the outside.
Most of the alcohol inside the trailer had been consumed, and all the students were over the age of 18.
The organiser had hired the trailer to shift furniture, and thought it would be an ideal opportunity to transport a group to the races, with a sober driver dropping them off at the annual event.
While the group were told to walk to the races, the driver was issued with a traffic infringement notice and was likely to appear in the Dunedin District Court at a later date.
Const Ballam said despite the students arranging a sober ride to the races, cramming themselves into a trailer was not an appropriate mode of transportation.
"It was extremely dangerous. If they had an accident no-one could get out, no-one was restrained, and it would have been chaos."
Under the Land Transport (Road User) Rule 2004, "A person must not ride in or on a vehicle, or in or on an object conveyed on a vehicle, in a manner or position that may be liable to cause injury to that person".
The driver faces a maximum fine of $1000 .
