The Victorian Bookmakers' Association has rejected arguments supporting Robbie Waterhouse's bid to field on the rails at the famous Warrnambool racing carnival.

With the three-day meeting featuring the Grand Annual Steeplechase to be held next week, a Warrnambool Racing Club request for Waterhouse to operate from a prime postion in its betting ring, has been denied.

In keeping Waterhouse on the outer, the state's governing body Racing Victoria says it is adhering to policy.

Waterhouse told Fairfax newspapers the decision would jeopardise further involvement at Warrnambool for himself and his wife, champion trainer Gai Waterhouse.

Premier Dr Denis Napthine weighed into the debate, saying Racing Victoria should reverse its decision in order to attract punters to the track to bet with Waterhouse, one of Australia's best-known bookmakers.

Napthine said Waterhouse's presence would benefit other bookmakers through laying off of big bets but VBA vice-chairman Greg Engellener questioned that argument.

Engellener, a rails bookie for the past decade, said Waterhouse's presence would mean little to punters.

"At the end of the day, punters are driven by price, not wanting to bet with a bookmaker because he's got a profile," Engellener said.

"If Rob Waterhouse has $5 up about a horse and the bloke next to him has $5.50, I can guarantee the punter will put his money on at $5.50."

Engellener said other Melbourne bookmakers with higher turnover than Waterhouse had also failed to secure a stand among the 24 bagmen in the main Warrnambool ring but they had accepted the decision.

The Waterhouse furore has prompted Warrnambool officials to apply to have Racing Victoria grant metropolitan status to the betting ring for next year's carnival.

Gai Waterhouse has expanded her racing team to include hurdlers and steeplechasers trained out of her Melbourne satellite stable and her horses are expected to figure prominently during the Victorian jumps racing season.