Police have taped off a house on Stawell's Main Street, across the road from Central Park where Australia's richest footrace is set to play out on Monday afternoon.
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Emergency services responded to reports of a couch being set on fire at the house, next to the iconic Gift Hotel, at 3.50am.
A 35-year-old man was arrested and is assisting police with inquiries.
A police presence remains at the house on Monday morning.
Stawell Gift semi-finals are set to line up from 11.50am, starting with women's semis ahead of finals this afternoon.
Racing resumed for the three-day carnival at 10.30am.
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