It will be the first $1 million harness race in NZ and is an increase of $450,000 on the stake last year.
It will be the richest race for aged pacers in the world.
The increase compares with the stake of $400,000 offered for the race three years ago.
Premier harness races will receive stakes increases totalling $1.6 million this year, Mr Peters said.
"Government funding of $750,000 boosted by $850,000 of club and industry money will raise the stakes of key harness racing events by a total of $1.6 million in 2008-09.
"Big-money races provide the bedrock around which highly successful racing carnivals can be built, bringing proven, serious economic benefit not just to the racing industry but to the economy as a whole and local communities in particular," he said.
He said seven premier races, four staged by the New Zealand Metropolitan Trotting Club and three by the Auckland Trotting Club would be the major beneficaries.
The Great Northern Derby in March will carry a stake of $600,000, an increase of $400,000.
It will be the richest race for 3yr-old pacers in Australia and NZ.
"These increases will firmly place some of New Zealands premier racing events on the world stage and attract immense interest from across Australasia," Peters said"Budget 2008 made available $9 million over three years for co-sponsorship arrangements to lift the prize money offered by New Zealand's premier races.
"These are the first results of that funding and it is testament to the strength of harness racing in New Zealand that its sponsors and clubs have so readily matched the government contribution," Mr Peters said.
The stake for the NZ Trotting Cup reached $100,000 in 1980.
It grew to $300,000 in 1987 and it was $375,000 for the next four years.
It was $300,000 the next four years and $350,000 from 1996 to 2002.
It was $400,000 for the next three years and $500,000 in 2006.
Footnote: Major thoroughbred races will also receive substantial stake increases from the budget allocation.
"We are awaiting word from Mr Peters on the detail. His aim is to up the international profile of NZ thoroughbred racing with big increases for a handful of selected races," NZ Thoroughbred Racing chairman Guy Sargent said.
