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If the recommendation is acted on it would see the Rotorua's Arawa Park course closed from the 2023/24 racing season.
Image 1 of 45: Interislander Summer Festival Rotorua Races at Arawa Park. Clarissa Eshuis, bottom left, and her hens party. 27 December 2016 Rotorua Daily Post Photograph by Ben Fraser RGP 28Dec16 - MATCHING: Cl
The report says the track is in a good location but has "below average infrastructure" and would not be required if a proposed synthetic track in Cambridge is built.
Racing Rotorua chief executive Damien Radesic said the report had come as a shock and the club would meet this week to discuss it.
"I think it will have quite a detrimental effect on the Rotorua economy to be honest.
"Take December 27 for example, that's 5000 people on the course it's one of the biggest events in the year in Rotorua. If you close the track you start to dilute the offering.
The report states: "We specifically recommend that no clubs should close, but that those clubs previously racing at venues that are closed should move to race at another nearby venue or merge with another club."
Track Racing Rotorua committee member and horse breeder Bill Pomare said he was disappointed and flabbergasted by the report's recommendation, particularly the fact it said the Rotorua track had below average infrastructure.
"We have good fields, we've spent a lot of money on the course and doing things we were asked to do so we could compete with other tracks."
Pomare said the committee would look "seriously" at the recommendation.
"The track is central in the city, accommodation is around it and people have got somewhere to stay within walking distance ... I think we've got one of the better winter tracks in New Zealand. We've got good facilities for visitors and racers."
Pomare said not having a home track would be difficult.
He admitted things in the racing industry needed to change.
"People are struggling. People with six to 10 horses are really battling because the stakes are not high enough ... money is not being channelled into the right areas."
Taumarunui Racing Club holds one meet a year at the Rotorua track. Club president Gayle Richardson said the recommendation to close it was "gobsmacking".
The club belongs to TRAC, a consortium of several clubs.
"TRAC will be fighting this and we will be right behind them," Richardson said.
She said the Rotorua track was in a prime location in town, close to accommodation and had excellent facilities.
In a statement last week Racing Minister Winston Peters welcomed the review, presented at a public meeting in Hamilton.
"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," Peters said.
"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 the Government planned to assess the report and produce a Cabinet paper with recommendations.
"While it is too early to say what Cabinet will agree upon, the severity of the situation means the status quo is unlikely to prevail."
Peters said there would be industry consultation on the proposed closures. The reduction of tracks from 48 to 28 is planned to be finalised by 2024.