The Government has announced plans to reform the Levy which ensures all operators who takes bets on British racing from customers based in Britain will have to pay 10 per cent of their gross profits above the first £500,000 they make.
The current system has been in existence since 1961 but has become outdated and while some offshore firms have been making voluntary contributions towards British racing, it is not compulsory.
The Government is hoping to implement the new scheme in April this year - subject to state aid for the proposals - and it will be enforced via a statutory Horserace Betting Levy.
Sports Minister Tracey Crouch said: "This move will help secure the future of horseracing in Britain by making sure that gambling firms pay a fair return to support the sport.
"Horseracing has a strong heritage in this country, employing thousands of people and is enjoyed by many almost every day of the year.
"This new approach to the Horserace Betting Levy will help sustain and develop the sport."
The sports minister will review the rate set within seven years of the new legislation to reflect any future changes in the market.
It all spells the end of the Horserace Betting Levy Board which will be wound up as the Government intends to transfer responsibility for collecting the Levy to the Gambling Commission in early 2018.
The announcement follows long periods of consultation between the betting and racing industries and the Government hopes it will ensure a level playing field between betting operators offshore and those based in Britain.
The aim of the Levy is to fund a wide range of areas including prize money, integrity and equine welfare among others.