The Galway festival will be limited to a crowd of just 1,000 spectators a day.
The track had hoped to welcome up to 5,000 racegoers on each day of the week-long fixture, which includes the Tote Galway Plate and Guinness Galway Hurdle, having submitted a detailed proposal to the Irish Government in late June.
The Irish Derby meeting at the Curragh was run in front of a 1,000-strong attendance as part of a Government pilot, and that is the figure Galway will also have to adhere to at the end of this month following the response to their submission.
"We got news last night that we will be able to host 1,000 spectators on each day of the summer festival," said Galway chief executive Michael Moloney.
“We know, given the support that we’ve got over the last couple of weeks, that this will be extremely disappointing news to all our fans who had been looking forward to the opportunity maybe of coming back to Ballybrit this year.
“In terms of our sponsors and everyone looking forward to a larger crowd this year, it is disappointing.
“On the upside it is 7,000 more people than we had this time last year – and for those that do manage to get to come to Ballybrit this year, we’re delighted we’ll have owners back and now a small amount of public on top of that.
“We certainly look forward to making it an event that will be worth being at.”