The future of the Porchetta Italian food festival is up in the air, with talks set to be held next week in an attempt to still stage it this year.
Gunnedah Jockey Club's Kathryn Blinman said there were "issues going on within the club, making it hard to manage".
It received a $20,000 grant from the state government's Back to the Track program, but Mrs Blinman said the club spoke to the grant committee at a recent meeting and declined the money.
A spokesperson for the NSW Office of Responsible Gambling said it was "examining options for an alternative local organisation" to run the event instead.
"We are supportive of the festival going ahead if a new operator can be found and the event still meets funding criteria for the Back to the Track program," the spokesperson said.
"As the $20,000 grant has not been provided to Gunnedah Jockey Club, we are keeping this funding in reserve while negotiations to find a new operator continue."