Sorry, it's what is more correctly called totalisator duty, payable under The Gaming Duties Act. It is what was reduced from 20% to 4% in 2003, to align it with the rate paid by casinos. A matter ignored by the Messara report is that presumably, if it is removed for Racing, the Casinos will make the same argument.
Of course the now $50m a year savings from that duty reduction was supposed to go, similarly to your suggestions, to a mix of stakes, infrastructure and to cover the costs of reducing takeouts. We all know what has happened there.