The New South Wales Government has been criticised for financially propping up the state's greyhound industry, two years after trying to ban the sport.

NSW Racing Minister Paul Toole today announced a $500,000 cash injection for the code, which will be used to fund the richest dog race in the world in Sydney later this year.

The "Million Dollar Chase", set to be staged at Wentworth Park in October will be the the jewel in greyhound racing's crown and feature the best dogs in NSW.

That public funds would be used to fund greyhound prize money has drawn the ire of NSW Opposition Leader Luke Foley, who described it as a "very expensive sorry note".

Mr Toole said the money would come from NSW's Community Development Fund (CDV) — which is made up from unclaimed gaming cash.

The fund was used two years ago to restore war memorials.

Before the race at Wentworth Park, several semi-finals will be held in regional centres.

"This is money that's going to see a real boost in regional communities," Mr Toole said.

"When you have a look at the economic boost that is provided by greyhound racing, you see the people that are turning up to these events, it provides a huge boost to those local towns."

Lisa White, who founded greyhound adoption charity Friends of the Hound, said she had been shocked to learn the Government was backing the sport's richest race.

"I think the industry is trying to dig itself out of a grave, and I can't help but smirking when I say that because I can envision all the poor dogs that have found themselves in exactly that over the decades that this industry has been allowed to continue," she said.

Prize money must be returned if winning dog killed

Greyhound Racing NSW CEO Tony Mestrov said all dogs that competed in the race would have to be re-homed, or kept as pets.

If the prize-winning dog is killed, the owner has to pay back the $1 million.

Mr Foley, the Labor leader, dismissed the money, saying the Government was trying to say "sorry".

"This is nothing more than a very expensive sorry note from this government to the greyhound industry," he said.

"Two years ago they tried to ban them off the face of the Earth, now they are trying to say sorry."

NSW Opposition leader Luke Foley criticised the Government for the cash injection. ( AAP: Carol Cho )

Earlier this month, the RSPCA announced it had found a mass dog grave on the home of a western Sydney greyhound trainer.

In February 2015, ABC's Four Corners revealed footage of live piglets, possums and rabbits being used to "blood" greyhounds during secretive race training sessions.

Former High Court judge Michael McHugh handed down his findings from an inquiry into the industry in June 2016.

The following month, then-premier Baird banned the sport.

"This is the biggest announcement the industry has had at least in the last 20 years," Mr Mestrov said of the race.

"I think the important focus is not only on the race itself and the $1 million to the winner, but on the welfare.

"We're been working extremely hard at Greyhound Racing NSW to increase animal welfare standards across the state."