Culture Secretary Jeremy Hunt sets terms of the scheme for 2011-12.
The headline rate of the 50th Horserace Betting Levy will increase from 10 to 10.75 per cent, the Government has announced today.
The threshold level under which betting shops pay a reduced rate of levy will also come down from £88,740 to £50,000.
The annual scheme is a levy on the profits of bookmakers from betting on British horse racing and goes towards funding racing through areas such as prize money, integrity services, veterinary science, training initiatives and breeding programmes.
The Government was forced to determine the levy after the racing and bookmaking industries failed to reach an agreement by the end of October last year.
Mr Hunt said: “It is really disappointing that two important industries have been unable to come to a sensible commercial agreement. I have tried to be fair by listening to the advice of the Independent members of the Levy Board and I will continue to be guided by their advice in future years until what should be a straightforward commercial negotiation can be taken permanently out of the hands of Ministers. “
The increased rate will apply to telephone and internet betting operators as well as Licensed Betting Offices. There will be no change to the scheme in relation to foreign racing.