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Mr Peters was at Karaka yesterday to open the May thoroughbred sale when he announced the levy would be phased out, following the recommendations of the Messara review.
The levy handed 4% of betting profits from the TAB to the government.
Those funds would now be redirected to the racing codes and sporting organisations.
"The levy will be progressively reduced over three years until it is phased out entirely," Mr Peters said.
"Making this money available will provide some much-needed financial relief and immediately increase revenue for the racing industry.
Mr Peters said the repeal of the betting levy was one minor step in his quest to reshape racing.
The first of two Bills he plans to introduce to the House would be introduced by July, he said.
The legislation would enable the transformation of the New Zealand Racing Board into the Racing Industry Transitional Authority and collect funds from overseas bookmakers using New Zealand sports and racing products for betting.