Dozens of co-owners will be affected if high-profile racehorse owner and accused drug smuggler Damion Flower isn't released from custody, a Sydney court has been told.

Flower, whose best-known horse Snitzel now earns $40 million a year at stud, faced Central Local Court on Wednesday to apply for bail.

He was arrested on May 22 and charged with helping to smuggle cocaine aboard commercial flights from South Africa.

Lawyer Chris Watson told the court Racing NSW had demanded Flower state why he shouldn't be banned from the sport while he fights the six drug charges.

“It has an impact on about 50 other people who are co-owners with Mr Flower,” he said.

“Relevant to the show cause issue is the very significant impact, on a whole lot of people, should he be unable to deal with the decision by Racing NSW.”

Racing NSW last week said the notice wasn't intended to prejudice Flower but to protect the integrity, image and interests of the racing industry.

The administrative body at the time noted the interim conditions were framed so those who “race horses with Flower” weren't disadvantaged.

The court was told on Wednesday that Flower's former wife, Camilla, was willing to offer her home – where the pair live – as bail security.

Flower was arrested on May 22 after authorities uncovered an alleged trafficking ring operating at Sydney Airport.

Police allege airport worker To Oto O Junior Mafiti, 50, used his airside access to collect cocaine from baggage holds before Flower picked up those drug-filled bags.

The court hearing continues.