The Jockey Club, the largest commercial group in British horse racing, is to increase prize money after a rise in turnover and profits last year.
Operating profit in 2011 was £19.2m, up from £18.3m in 2010. The body paid out £16.4m in prize money during the year.
Meanwhile, turnover was up to £139.4m, an increase of £1.4m.
The Jockey Club, which owns the Cheltenham, Aintree, Newmarket and Epsom race courses, will increase prize money this year to £16.7m.
The move will help to offset a decline in funding from the levy paid by the betting industry.
Most major betting firms now run their online operations outside the UK, and pay tax and levy only on business done within the country rather than on their total global operations.
However betting exchange Betfair volunteer to pay the UK horse racing levy as though it was British-based.
"We were able to afford to contribute more than ever to British racing in the form of prize money, despite the challenging economic environment around us," said Simon Bazalgette, group chief executive.
"However, British racing is still significantly underfunded. We need the government to press on with a legislative framework that allows racing to receive a fair commercial return from the betting industry."
The Jockey Club, which was founded in 1750, said funds from the betting levy fell from £115m in 2007-08 to £65m in 2011-12 following the move offshore by a number of bookmakers.
As well as racing festivals, the Jockey Club's financial figures were also helped by revenue from media rights, hospitality and sponsorship.