The federal government has clamped down on a move by Norfolk Island to approve an online betting exchange with links to the world's biggest illegal operator.
The racing industry reacted angrily last year to a decision by the Norfolk Island Gaming Authority to licence BetHQ to bet on Australian racing, saying it put at risk a multimillion dollar business with 200,000 employees.
The Australian government on Thursday issued a direction to the authority not to make any decisions on licences without ministerial approval.
The direction from the territories minister bans licence approvals, transfers and variations without ministerial approval.
Racing Australia chief Peter McGauran is understood to have met with the minister, Paul Fletcher, this week to discuss the issue.
Mr McGauran told the Weekend Australian that Norfolk Island had done something that no one else in the world has done "and that is effectively license the world's biggest illegal bookmaker", Citibet, based and licensed in the Philippines.
"The NIGA did not make the most rudimentary probity and background checks on BetHQ, let alone Citibet," he said.
Racing Australia asked the minister to consider either disbanding the Norfolk Island authority or merge it with Racing NSW.
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