SPRINGFIELD — Illinois' already hobbled horse racing industry could be headed toward a "tragic" situation if lawmakers don't take action on a soon-to-expire law, top horse racing observers say.

A law allowing online wagering on races at Illinois horse tracks is set to expire Jan. 31. Without an extension and an agreement to pony up more funds, the number of racing dates would be either eliminated or deeply slashed at the state's tracks.

Illinois lawmakers could take up the issue when they convene for the fall veto session next week. Or discussions could be rolled into a debate over a larger gambling expansion package that has languished in the General Assembly for years.

A hearing on a gambling expansion plan, which would add five new casinos and allow slot machines at race tracks, is set for Wednesday.

"We don't know what's going to happen," said Steve Brubaker of the Illinois Harness Horseman's Association.

The situation is reminiscent of last spring when the law allowing Internet-based gambling on horse racing expired and lawmakers failed to renew the law for several months.

In reaction to the uncertainty, the racing board last month approved four alternative racing schedules for 2014, including one doomsday scenario that would cut the number of racing days to 87, down from this year's 466 days, if the law is not renewed and no money is made available.

Under the worst-case scenario, there would be no racing at Maywood and just 13 race nights at Balmoral in July, August and September.

"Thousands of horsemen would lose their jobs and have their lives turned upside down under this scenario," said Illinois Harness Horseman's Association President Dave McCaffrey in a statement posted on the organization's website.

In the most optimistic plan advanced by the racing board, the General Assembly would renew the Internet betting law and give the agency access to $725,000 to cover a shortfall leftover from the temporary expiration of the law last spring.

The dollars could come from general state funds or from higher taxes or fees generated by the racing industry.

Abdon Pallasch, deputy director of Gov. Pat Quinn's budget office, said it remains too early to tell whether lawmakers will discuss adding new spending to the budget.

In addition, he said Quinn continues to insist the General Assembly must fix the state's pension mess before it moves on to other issues.

Illinois Racing Board Executive Director Mark Laino said he is meeting with horse industry officials in an attempt to work out a deal. He said he hopes the issue doesn't get wrapped up in the debate over an expansion of gambling.

"We'll try to do a stand-alone bill. There have been a number of discussions," Laino said.

The House and Senate begin the six-day fall veto session Tuesday.