Racing Wodonga's general manager Steve Wright says he is "shattered" the club has been forced to exclude the public from next Friday's Gold Cup meeting.
The club was clinging to the slim hope that restrictions would be eased at some stage this week and allow the public to attend its premier meeting.
Only industry participants and race day officials can attend.
Wright said the club had waited as long as possible before making the announcement on Thursday.
"To be honest we are shattered the public can't attend because 12 months work and planning goes into the cup meeting," Wright said.
"Not only for the club but it would have also provided a timely boost for the local businesses and economy that have been crippled by COVID-19.
"Unfortunately, the logistics of putting on an event of this scale means that it just isn't possible for us to wait any longer to make this extremely disappointing call.
"While the announcement is no major surprise we had been planning for months now that we may be able to have a crowd in the vicinity of 500.
"The worst thing is I wouldn't be surprised if there was some sort of announcement on the relaxation of restrictions regarding crowds as early as next week.
"But even with a reduced crowd the amount of infrastructure we have to bring in and set up makes it all too hard.
"Because at the moment with the Racing Victoria protocols we don't have access to our members room and any of the indoor facilities."
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The club attracted a record crowd of 9500 last year with previous manager Tom O'Connor instrumental in the growth of the meeting.
Wright said the club would be able to cope with the financial fallout from having no crowd in attendance.
"It won't have a massive impact on the club's bottom line," he said.
"We are in a strong position financially.
"We were more worried about just being able to welcome back our members, sponsors and racegoers to our premier meeting."