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The report by Australian expert John Messara delivered a "blunt appraisal" of the industry, Minister for Racing Winston Peters said.
"Mr Messara's review delivers a blunt appraisal. He concludes the New Zealand's racing industry is in a state of serious malaise, and requires urgent reform. The review also warns thoroughbred horse racing is at a tipping point of irreparable damage," Peters said.
He released the Review of the New Zealand Racing Industry in Hamilton this evening.
"It confirms what many of us have been worried about for a number of years and highlights the need for the industry to turn itself around."
Peters said while it was too early to say what Cabinet would agree on after officials gave advice on the report, "the severity of the situation means the status quo is unlikely to prevail".
"As this review identifies, a complex task lies ahead and for that reason Cabinet will also consider establishing a transition agency to help guide the process, particularly if there are changes to racing governance," he said.
"Racing is a significant industry built on passionate support. It has created an industry with $1.6 billion to GDP annually and is a major employer. As nation we should nurture this industry and grow it into something even greater."
Recommendations in the report include:
• Renaming and restructuring the New Zealand Racing Board into Wagering New Zealand, with responsibilities devolving to individual codes
• Outsourcing the TAB's commercial activities to an international wagering operator to gain advantages of scale
• Reduce the number of racetracks around the country from 48 to 28 and upgrade the remainder
• Build three synthetic tracks at Cambridge, Awapuni and Riccarton
• Increase prize money to over $100 million per annum