It's understood Mr Bailey, his wife and two teenage children were at the back of the house during the shooting about 9.20pm on Sunday in Templestowe.
No one was injured and Racing Minister Martin Pakula says extra security is now guarding the family.
The minister said stewards have difficult jobs and sometimes have to upset people but he couldn't recall a similar direct attack on a steward.
"This sort of direct assault on the home of the chief steward is just absolutely outrageous and unacceptable," Mr Pakula said. It would not deter officials from doing their job and ensuring racing is a clean sport, he said.
"If I know Terry Bailey, those people that might want to deter him or racing integrity officials from doing their job and doing it properly, will be sadly disappointed.
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"Terry Bailey is one tough cookie." Neighbours said they heard loud bangs and raced outside to see what was happening. "It shook our windows," Daniel Martinez told AAP.
The family has been interviewed by police, who arrived at the home and began collecting evidence shortly after the shootings.
They think the shooter walked over the Baileys' front lawn to the front door. "If it was a drive-by there would have been casings on the road," Mr Martinez said.
"Someone walked up to their front door. "It's scary to think this can happen." RV chief executive Bernard Saundry has asked that the Bailey family's privacy be respected at this distressing time.
"Victoria Police are investigating the incident and we will afford them whatever support is necessary to ensure that the people responsible for this disgraceful act are brought to justice," Mr Saundry said in a statement.
