The British Horseracing Board's plans for the future funding of the sport have suffered a huge blow after it lost a court battle over data rights.
The Court of Appeal has upheld a ruling that bookmakers William Hill should not have to pay for using data such as lists of runners and riders.
The BHB had planned to fund racing using a system based on selling such data to the gambling industry.
Racing is currently funded by the levy system, which is being abolished.
Under the levy system, which will remain until at least 2009, bookmakers return a percentage of their profits to the sport.
William Hill said in a statement that it was "pleased" with the Court of Appeal's verdict.
The statement added: "Whilst any future litigation remains at the call of the BHB, William Hill hope that the racing industry will now look forward to developing a valid alternative for the future funding of racing."
BHB chairman Martin Broughton said it was "a black day for racing" but added: "It is not a crisis."
The case dates back to 2000 when the BHB initiated legal action against William Hill for allegedly infringing the BHB's data rights by publishing lists of runners and riders on the bookmaker's website.
In 2001, the High Court ruled in the BHB's favour but the case was referred to the Court of Appeal after the European Court of Justice found in favour of William Hill last November.
And on Tuesday, the Court of Appeal ruled against the BHB, which handles the administration of racing in the UK.
A further hearing later on Tuesday is expected to confirm costs, with William Hill believed to have spent in the region of £800,000 on the case.
However, the greatest cost to the BHB may yet be to come with existing contracts based upon the sale of data to bookmakers in Ireland and other countries.
While the BHB has been advised by legal counsel that these contracts remain valid despite the latest judgement, a forthcoming court case in Dublin could in theory force the BHB to return payments already received under the contract.
Last year the BHB received a total of more than £17m in commercial
income from data deals with bookmakers at home and abroad.
Details of what the decision will mean to the BHB's short-term finances could
become clear at a board meeting next Wednesday.
In the meantime, Broughton will brief sports minister Richard Caborn of the latest developments.