Fairfax Media spoke to several bewildered breeding and racing figures after O'Farrell was given the role at the industry regulator, which is charged with administering the rules of the sport and fostering better government relations.

It is O'Farrell's first full-time role since he famously quit politics over a gifted bottle of Penfolds Grange wine.

Far from using his vast array of skills in a behind-the-scenes directorship, O'Farrell will be required to perform a hands-on role in a unique industry riddled with disputes.

"From the industry perspective it's an interesting, and possibly confusing, appointment," Australian Trainers' Association chief executive Andrew Nicholl said.

"We have no idea about what skills he's going to bring to the table and what his background is in terms of racing, but from the ATA's perspective we welcome him and will work with him for the betterment of the industry."

The industry's other national representative groups which regularly lobby Racing Australia, the Australian Jockeys' Association and Thoroughbred Breeders Australia, declined to comment on O'Farrell's appointment.

The long-serving Liberal politician replaces former federal National MP Peter McGauran, who is switching to a new role at Tabcorp.

Ex-prime minister Tony Abbott's former chief of staff Peta Credlin was sounded out for the Racing Australia job before the selection panel chose O'Farrell, who recently chaired a review of online gambling for the federal government.

O'Farrell was endorsed by departing Racing Australia chairman John Messara, who will stay on as an independent director despite leaving his Racing NSW post at the end of the year.

It was the O'Farrell government that handed over $12.3 million to Racing NSW in November 2013 to massively boost prizemoney in a bid to make Sydney's autumn carnival become a globally-recognised event, known as The Championships.

Messara's horse It's a Dundeel, co-owned with 2GB broadcaster Alan Jones, won the first Queen Elizabeth Stakes in 2014 after the prizemoney for the race was boosted from $500,000 to $4 million.

Racing Australia said in a statement on Wednesday that O'Farrell would begin the job in late January.

"Mr O'Farrell has a strong background in public administration and financial management. He served with distinction in the NSW Parliament for 20 years, including as NSW premier between 2011 and 2014," Racing Australia said.

"Over that time Mr O'Farrell managed complex policy, legal and financial issues with a diverse range of stakeholders.

"He is an innovative and experienced leader who will bring his demonstrable skills to the organisation."

Since his departure from politics O'Farrell has been fairly low-profile, doing work for the Australia-India Council and more recently being appointed by the Turnbull government to do a review into illegal offshore betting.

O'Farrell was contacted for comment but did not return calls.

He will have to soothe tensions in an industry in which stakeholders, including groups representing jockeys, trainers and breeders, have complained about Racing Australia riding roughshod over their sectors.

A senior training figure said the administration looked like a "mates' club where the baton is passed around" among a tight-knit group.

Fairfax Media has been passed letters from three peak bodies sent to all state racing ministers, highlighting an "alarming lack of governance" at Racing Australia and urging them to demand an independent chairman and oversight by a federal government minister.

The Australian Jockeys' Association and the NSW Trainers Association said in a joint letter: "We reluctantly appeal to you because national and state associations that represent industry participants are being excluded from any direct involvement or consultation as Racing Australia, which has no accountability, introduces new rules and regulations.

"In many instances, we are concerned that the principal racing authorities who should be directing Racing Australia as shareholders are instead deferring to Racing Australia and its chairman."

In a separate letter, Basil Nolan, president of Thoroughbred Breeders Australia, called Racing Australia's processes "dysfunctional".

Messara, who owns Australia's largest stud farm, Arrowfield, dismissed their concerns as "nonsensical", saying each group looked at every issue "purely from their own perspective".