It is adding up to be a costly backflip.

After backing down on banning the sport last year, the State Government will now spend more than $40 million to reform the greyhound racing industry.

The money will be used to improve animal welfare outcomes, and will include upgrading greyhound tracks to appropriate standards.

But the funding will be phased out in five years' time, with the industry expected to foot the bill for a new greyhound welfare and integrity commission into the future.

The establishment of a commission, separate to the industry's commercial arm, was one of 122 recommendations made by the greyhound industry reform panel last month.

The panel was set up last year to address the shocking animal cruelty in the industry that had initially triggered the Government to announce a ban on the sport.

The Government backflipped on the ban after a backlash from the industry and intense pressure from Nationals MPs in the lead up to last year's Orange by-election.

The Racing Minister Paul Toole said the Government was now committed to ensuring greyhound racing continued in NSW.

"We are putting $41 million in total to support the industry," Mr Toole said.

"Now, as a part of this, $11 million will be allocated to the integrity commission and this will be phased out by the fifth year when the industry will need to stand on its own and be sustainable."

Tax on bets considered

However questions remain about how the industry will fund the body and other animal welfare measures after the five years is up.

Brenton Scott from the Greyhound Racing Industry Alliance said the industry would continue to push for changes to the inter-code agreement, which distributes TAB revenue between different greyhound, thoroughbred and harness racing sections.

"We will be working with the Government and the parliamentary system to continue to have that matter resolved," Mr Scott said.

"We ask for no more than to be able to stand on our two feet … we will continue to press for a fair funding outcome."

Mr Toole said a number of funding options were being considered including a "point of consumption tax" which would apply to bets on the sport.

The tax would target betting companies based upon where bets are placed, as opposed to where the betting provider is located.

South Australia introduced the new tax last year to close the loophole associated with interstate betting.