Independent4Change TD Clare Daly made the accusations as she outlined how no contracts, time sheets, or formal agreements were in place for some stable hands and trainers.
There is “something rotten at the heart of horse racing”, said Ms Daly as she called on Mr Kenny to order “multi-agency swoops” on the sector.
Speaking during leaders’ questions, Ms Daly explained why the industry needs to be fully investigated.
She claimed a collective agreement had been signed between the Irish Stable Staff Association and the Irish Racehorse Trainers Association.
Ms Daly disagreed that trainers must be registered with the Turf Club and that they were charging appropriate rates.
Attempts to set up a pension scheme through the Turf Club last year, via a search exercise for P60s and staff returns for those earning over €25,000, only resulted in 300 replies, she told the Dáil.
“How can it be that there are only 300 workers earning more than €25,000 in a multi-billion-euro industry with thousands of workers,” asked Ms Daly.
When the threshold was lowered to €12,500, this resulted in 800 names.
Ms Daly claimed these trainer staff are operating in a black economy.
She said: “They are buried in the bowels of the black economy — cash-in-hand, on the dole, racing allowances agreed with Revenue as tax-free expenditure being calculated as part of the minimum wage, no contracts, no tea breaks, no time sheets — in an industry that is so brazen its collective agreement advertises illegality.
“There is something very rotten at the heart of Irish horse racing which we have not fully figured out,” she said, calling on Mr Kenny to order swoops on the industry through Revenue, government departments, and other authorities.
Mr Kenny agreed to look into the issue if there “is a black economy in this area such that there are people working in the industry at below minimum wage rates”.
There is “wholesale illegality” in horse racing, insisted Ms Daly, who said it needs a multi-taskforce approach. A confidential hotline would encourage good trainers paying the correct wages to report abuses or the black market, she said.