Western Australia's TAB will be sold and bookmakers will pay a new tax on profits, but the state government has promised the racing industry will be no worse off under its reforms.
Under the "point of consumption tax", which will replace two existing taxes, online and foreign-owned corporate bookmakers will pay 15 per cent on profits from bets made in WA, regardless of where they are licensed.
The local racing industry will then receive 30 per cent of the total revenue.
Meanwhile, Treasurer Ben Wyatt would not reveal how much he expected the state would receive from the privatisation of the WA TAB, but previous estimations have valued it between $200 million and $1 billion.
Mr Wyatt said 35 per cent of the sale proceeds would go towards a dedicated racing infrastructure fund.
"This is the most significant reform package put forward for the racing industry in its history, and is in the best interests of the whole state and our WA racing industry," he said on Tuesday.
Racing and Wagering WA chief executive Richard Burt said the industry backed the TAB sale, the tax plan and the "no worse off funding principles".
WA is the last state to have a government-owned gambling agency, but the Barnett government had flagged the asset sale in 2014.
Opposition spokesman for racing and gaming John McGrath said it was a good deal, but described Labor's decision as one of the biggest backflips in the history of parliament.
"When we as the Liberal government wanted to bring in the sale of the TAB four years ago, we faced enormous opposition," he told reporters.
"If the industry wants it ... it would be retrograde of us not to support it."
Nationals WA spokesman Colin Holt said the party would not support the sale of the TAB without a preserved benefit for regional race clubs and participants.
"I fear Labor views this transaction as a revenue raising exercise instead of an opportunity to enrich the livelihoods of thousands of people across regional WA involved in the racing industry."
The point of consumption tax was included in the McGowan government's first budget and legislation will be introduced in parliament this week so the system can take effect on January 1.
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