And it's not just the Canadian racing industry feeling the pinch.
Since the 1960s, when off-track betting was legalized in Britain, the racing industry has benefited from a direct payment from bookmakers called the Betting Levy.
But that Levy is now under threat as some firms take advantage of a loophole which allows them to base online wagering units outside the UK and pay no money -- despite taking bets on British races.
"The Levy has almost halved in value between 2009 and 2011 to £34 million ($53 million) and this is starving the sport of prize money, which is its lifeblood," says British member of parliament Matthew Hancock, who is trying to close the loophole.
"I speak to owners who now cannot cover their fuel costs to get to the race tracks, even when their horses perform well."
He says if no action is taken to reform the Levy, it could put at risk the livelihoods of some of the nation's 100,000 horse racing employees.
In response, UK betting companies say a change in the rules would lead to extra costs for them and the possibility of 2,000 betting industry workers losing their jobs.
One of the 'offshore' companies at the center of the issue, Betfair, has tried to strike a balance by signing a five-year, £40 million ($63 million) funding deal with the British Horseracing Association.
Future of horse racing?
With betting and gambling proving to be a source of funding headaches, could racing bodies walk away from wagering as a main source of revenue and look to make it in other ways?
"Relying on handouts is not the way forward and it is all about trying to harness all the assets you have in racing and not sit back on a single funding mechanism," says Nigel Roddis, development director of Racing for Change, an organization looking to boost race track attendances and revenues.
"It's about making the product on the track far more attractive to corporate sponsors and families alike so they want to be part of it.
"That includes marketing to a new audience -- when they come they won't just pay at the gate, they will eat here, drink here, bet here and each day adds to the diversification of our income."
And it seems to be working. The number of people visiting UK racing meetings rose by 5% in the past year, according to British horse racing commercial group The Jockey Club.
Meanwhile, the British Horseracing Association will also help deliver £50 million ($79 million) worth of improvements to racing facilities, through the sale of the former state bookmakers.
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Even the owners of Fort Erie in Ontario are now turning away from gambling in a bid to secure its future.
Plans for a hotel and tourist resort have overtaken the battle to secure government state funding, as Jim Thibert explained.
"We are nine miles from Niagra Falls and just over the border from the United States . We could build a place to stay which encourages tourists to come here and still see the horse racing," he said.
"Things are tough with the removal of the slots revenue, but there still is hope that we could get funding to build something different here and keep racing alive."