Speaking at a select committee about the Budget measures for racing, Peters criticised police attempts to impose bans on BYO alcohol at the races.
Speaking about the importance of racing in the regions, he said more people went to the races at Dargaville than Avondale "until the police were giving the directive to start stopping them taking any grog along and interfering with their country lifestyle".
"And you will recall the head of the Kumara races said he wanted these shiny bums to keep out of his part of the country.
"What he means is that is part of their culture. You go there and you'll see 8000 to 9000 at Kumara. Why are bureaucrats in Wellington interfering with their lifestyle?"
It followed an interpretation of liquor laws by police that many large events were breaching liquor laws by allowing BYO alcohol.
Peters also blamed "too many old males" for holding back racing development at some courses.
Peters said racecourses in the regions such as Ruakaka at Whangarei were not using their assets to their full potential and could use some of their land for developments such as retirement villages to raise revenue.
He pointed to the example of Riccarton in Christchurch, which last year received approval to use some of the land around the racecourse for housing developments.
"You've got them all round the country where they could be retirement villages and places like that. Christchurch is starting to realise that. But these clubs are sitting on assets and, dare I say it, too many old males not giving other people a chance to make a contribution to the health of the racing industry locally."
Peters also pointed to China as the racing industry's possible salvation, saying the liberalistion of the industry in China would open up opportunities for bloodstock exports.
He said he had met with those involved in the industry on his recent trip to China, including a representative for Chinese billionaire Lang Lin, nicknamed Mr Wolf.
Lang was a regular at the Karaka sales and exported horses to Inner Mongolia. He was a driver behind the fledgling racing industry in China .
Peters said New Zealand could be exporting three or four times as many horses as it did at the moment.
While betting on racing was not allowed in China, he said there was an $8 billion investment to establish the industry.
