Work on the project is expected to start after next year’s May Racing Carnival and would connect both grandstands by doubling the size of the Matilda room.

The area, which is currently a partially enclosed walkway, will also include a new cafeteria at ground level as well as a designated owners and trainers facility.

Warrnambool Racing Club chairman Nick Rule said the extended Matilda Room would be designed so that it could be divided into two sections for different events.

“The concept is to provide racegoers with more viewing areas in comfortable surroundings eating a really nice meal,” he said.

Mr Rule said the club still had to find the rest of the funding to complete the project but was hopeful of securing financial support from the racing industry and state government.

He said the club was also in a strong financial position to contribute and make the project happen.

Mr Rule said the project was timely, meeting the growing needs of the club while also providing the community with a multi-purpose facility that would be the only one of its kind in the region.

Member for Wannon Dan Tehan, who made the funding annoucement, said the facility would not just be for the racing club but for the whole community and could be used to host major events, weddings and parties.

“We have a first-class facility, we want to make it a world-class facility,” he said.

Mr Rule said thoroughbred racing generated more than $97 million in the south-west, and employed more than 950 people as well as 4500 volunteers or participants.

“The May Racing Carnival alone injects $7.3 million of new money directly into Warrnambool, and this project is a significant investment in the future sustainability of our club and industry,” he said.

Funding for the project comes from the Building Better Regions Fund – Infrastructure Projects stream.

Mr Tehan said the project would have a major flow-on benefit including significant economic gains to businesses, accommodation, hospitality and tourism industries across Warrnambool.