The British government kept the 2008-2009 horse racing levy at 10 per cent today but said it would like to see the funding arrangement scrapped in future.
It said it would also look at whether high stakes gambling machines, which bring in around a third of major bookmakers' profits, were fuelling problem gambling.
The government made the decision after being asked to step in and resolve a dispute between bookmakers and the racing industry over the size of the levy.
Bookmakers such as William Hill, Ladbrokes and Coral will continue to give 10 per cent of their horse racing-related profits to the racing industry for the next year but the government said it would like to see an end to the levy in its current form after that.
"We believe this is the wrong way for racing to fund itself, there needs to be an alternative," said a government spokesman.
"Ideally that would be a commercial alternative, but if it's not commercial then there needs to be a way of ensuring it is decided by the bookmakers and racing, not the government."
The levy has been in place since betting was legalised in 1961 and this is only the second time in 15 years the government has had to settle a dispute about it.
This time it erupted after leading racecourses, including Ascot, Cheltenham and Epsom, set up a rival provider of live racing coverage in tandem with gambling data firm Alphameric.
The government said it had asked Britain's Gambling Commission to look into whether high stakes gambling machines, including fixed odds betting terminals (FOBTs), were triggering problem gambling.
FOBTs are highly profitable for UK bookmakers, and any changes in laws surrounding them would be a blow to firms with high street betting shops.