A parliamentary inquiry has been set up to scrutinise allegations of industry mismanagement, inappropriate distribution of TAB funds and widespread mistreatment of dogs in the state's $50 million-a-year greyhound racing industry.

Greens MP John Kaye successfully moved a motion in the Parliament on Tuesday to establish the inquiry, saying it was clear that the industry was in a state of crisis.

"A parliamentary inquiry will shine much-needed light on the greyhound racing code, which has been plagued by claims of mismanagement and animal mistreatment." Credit:Peter Stoop

"The greyhound industry in NSW is no stranger to controversy. Animal welfare scandals, shonky management practices and allegations of criminal involvement have caused considerable community concern in recent years,'' he said. "A parliamentary inquiry will shine much-needed light on the greyhound racing code, which has been plagued by claims of mismanagement and animal mistreatment.''

Dr Kaye said the inquiry was essential to ''address the public loss of confidence in the industry's management and turn around the shocking animal welfare record that sees too many dogs injured and destroyed each year''.