A light rail link between the city and Sydney's eastern suburbs has been welcomed by the NSW thoroughbred racing industry.

The $1.6 billion project is expected to be completed by 2020 and will include the Australian Turf Club's (ATC) Randwick racecourse as one of its stops.

ATC chief executive Darren Pearce said Thursday's announcement was a "fantastic outcome" for the racing club because it would allow for better raceday access.

"Light rail can move more than 12,000 people per hour compared to 3,500 on buses," Pearce said.

"During carnival times this is a fantastic outcome for Royal Randwick.

"To be able to improve our customer's overall experience of a day at the track by getting them home quickly and efficiently is a big win for us."

Randwick racecourse is undergoing a $150 million redevelopment which includes a new grandstand and the creation of a 4500-seat Theatre Of The Horse parade ring.

"It (the light rail announcement) could not have come at a better time as it complements the Australian Turf Club's redevelopment of Royal Randwick," Racing NSW chairman John Messara said.