Embattled jockey Danny Nikolic has been offered "a way back" from racing exile by the Victorian Civil and Administrative Tribunal which has reduced his two-year disqualification.

Nikolic, who was banned after being found guilty of threatening and abusing chief steward Terry Bailey, had his penalty varied to a one-year disqualification to be followed by a 12-month suspension.

VCAT vice-chairman Michael Macnamara said he also considered the result of the Damien Oliver betting scandal in agreeing with Nikolic's claim his original sentence was effectively a life ban.

"This is an opportunity to provide a way back," Macnamara said.

In one of the most bitterly fought racing cases in decades, Nikolic threatened Bailey during a race meeting at Seymour in September, telling him he knew where he and his family lived.

He also launched a torrent of obscene abuse at Bailey.

Nikolic pleaded not guilty, but admitted at a later appeal hearing he had lied about vital aspects of the case against him.

He was also found to have lied when he denied threatening a prosecution witness.

His appeal against the verdict of the Racing Appeals and Disciplinary (RAD) Board was dismissed by VCAT last month.

But the judge who rejected his appeal reduced the severity of the sentence on Tuesday.

Macnamara said he accepted the submission of defence counsel Jack Rush, QC, that Nikolic's offending was not in the same league as Oliver's.

"I accept Mr Rush's submission that this doesn't touch on integrity in the same way as Oliver's," Macnamara said.

Oliver received an eight-month disqualification followed by a two-month suspension after pleading guilty to betting $10,000 on a rival horse in a race in which was riding.

The penalty has been widely viewed as inadequate.

Macnamara also accepted that Nikolic had been under extreme personal pressure at the time of the offence from allegations of race-fixing and the unfounded suspicion attached to him following the so-far unsolved murder of his ex father-in-law Les Samba.

At the same time he agreed with the submission counsel for the stewards, Sandeep Mukerjea that Nikolic's "calculated assault" on the chief steward deserved a serious penalty.

"Anything less ... would fall short of the expectations of the racing community," he said.

Nikolic can resume riding trackwork and associating with other licensed people from September 5, but cannot resume riding in races for a further 12 months.