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The Jockey Club, horse racing's largest commercial organisation, is increasing by 10% the prize money it contributes to the sport in the UK.

It has announced it is increasing its year-on-year prize money by £1.2m, from £12.5m to £13.7m.

Racing is the UK's second most attended sport and employs thousands of people.

But it says it has been hit by bookies moving offshore to avoid paying the Horseracing Betting Levy on the right to take bets on British races.

It means cash from the levy, a major funding mechanism, is now in decline.

In 2009, the yield from the Horseracing Betting Levy shrank by more than 20%, from £115.3m to £91.6m.

And reports have predicted that the 2010 levy has dropped even further, to £76.5m.

To help make up for resultant cutbacks in the level of race prize monies which have usually been made by the levy's administrators, the Jockey Club has stepped in.

The prize money from the Jockey Club, which operates 14 leading racecourses in the UK, is the most yet contributed by a racecourse group.

It comes after better-than-forecast returns from its major 2010 Festivals, including the Cheltenham Festival, John Smith's Grand National Meeting at Aintree and the Investec Derby Festival.

The body described its move as "major financial support for owners, trainers, jockeys and stable staff".

Horse racing has also been hit by a drop in the value of its media rights agreements with terrestrial broadcasters, including the 91Èȱ¬ and Channel 4, for the 2010 to 2012 period.

"We have taken the decision to increase our investment in 2010 prize money to its greatest ever level at a time when vastly reduced levy contributions have reduced the total amount for racing," said Simon Bazalgette, group chief executive of the Jockey Club.

"The Jockey Club is making the absolute maximum effort for our sport in very difficult funding circumstances for all."

Mr Bazalgette said the money would make a big difference in the racing community, where the sport supports more than 100,000 livelihoods across the UK.

And the Horsemen's Group, which represents British racehorse owners, trainers, jockeys, stable staff and thoroughbred breeders, welcomed the news.

"I also hope that other large racecourse groups will follow their lead in protecting the Horsemen's income at a time of great financial pressure for the Horsemen's constituent members," said its chief executive Alan Morcombe.

The bookmakers' body, the ABB, has previously said it was not to blame for horse racing's economic plight, and that it would only pay a "fair value for the racing product, not an enhanced value".

In a separate development, the Jockey Club has said soft drink brand J2O, made by Britvic, will become the title sponsor of a new summer flat race series.

The nine-race series will be known as the J2O White Blend Summer Series and run from 6 August to 25 September 2010.

It will be held at eight Jockey Club racecourses: Haydock Park (two fixtures), Nottingham, Sandown Park, Carlisle, Newmarket, Warwick, Epsom Downs and Kempton Park.

The competition will end with a series final at Haydock Park on 25 September 2010.

As part of the deal, Britvic Soft Drinks Limited will receive rights including branding on trackside signage, the presentation podium, number cloths, winners' blankets and media materials.

It will also enjoy advertising on the big screen and in the racecard, allocated tickets, hospitality facilities and associated marketing rights.