Donna Harpauer (HAR'-pow-er), minister responsible for the province's liquor and gaming authority, says that will leave more revenue for the industry.
The 10 per cent levy, known as a peri-mutuel tax, is collected from every wager at horse-racing tracks in the province and raised $857,000 last year.
It also applies to bets Saskatchewan residents make on races outside the province.
There were concerns about whether the industry could survive after the gaming commission announced earlier this year that it was cutting $1.5 million in grants.
The operator of Marquis (MAHR'-kwiss) Downs in Saskatoon says he's pleased the government has listened to the industry's concerns.
"Horse racing has been a fixture in Saskatoon for more than 40 years and the elimination of this tax creates a more positive business environment that will allow us to continue to provide exciting racing entertainment," said Mark Regier, CEO of Prairieland Park Corp.