RACING faces a savage $6 million cut to its projected $13 million season's profit if the Victorian Government proceeds with a shock poker machine levy.

ROD NICHOLSON reports for the HERALD SUN that Racing Victoria chief executive Bernard Saundry today met with joint venture partner TabCorp to determine a strategy - TabCorp is threatening legal action - and will request an urgent meeting with the government and treasury within days to clarify the situation.

The Victorian government informed TabCorp and Racing Victoria (as well as Tatts) that it will impose a full year's levy for its poker machine operations for 2012/13, rather than the pro-rata levy for the 46 days it operated until April 15 last year.

Racing Victoria was a 25 per cent shareholder in the TabCorp poker machine setup and therefore would be liable for its share of the extra $13.6 million in levies (above the pro-rata figure) being demanded by the government.

"We are surprised, shocked in fact," Saundry said.

"We are looking at our options and that starts with an immediate meeting with TabCorp and then the government."

Saundry said Racing Victoria had budgeted for a levy, but clearly on a pro-rata basis and not the full year.

"The surprise is the extra $8.5 million we have just been informed about. Racing's share of that is about 70 per cent (trots and dogs make up the rest)," he said.

That means the levy could have a dramatic impost on the industry, wiping $6 million from its bottom line this financial year.

"It would hurt our budget badly," Saundry said.

The levy, legislated under the Gambling Regulation Act, charges operators $4333 per machine annually.

TabCorp (and its partner Racing Victoria) ceased operating on poker machines on April 15 last year after the state government changed the licence structure to put management in the hands of venue operators.

STORY SOURCE: MELBOURNE  HERALD SUN – NEWS LIMITED.