The Tabcorp $11 billion demerger plan could be scuppered after Racing NSW threatened to take legal action and said the slated spin-off of the gambling giant’s lotteries and wagering arms would adversely affect the racing industry.

Peter V’Landys, the chief executive of Racing NSW, said the industry received “hundreds of millions of dollars” from Tabcorp under a 99-year licence agreement, and this would shrink significantly if the laggard wagering arm was spun off from the more profitable lotteries business.