The Government is to establish a new gambling regulator with powers to impose fines and issue licences to betting companies.
The development means previously unregulated areas such as spread betting will be overseen by a new regulatory authority.
Speaking after briefing the Cabinet on the measures, Minister of State David Stanton said it was "a big decision", which would cover all forms of gambling, including spread betting.
"The Government has made a major commitment to the modernisation of our licensing and regulatory environment for gambling. It will require resources. However, the ultimate aim is that the regulatory authority will be self-financing through fees and levies imposed on licensed gambling operators," he said.
Mr Stanton said an interdepartmental report on the issue recommended fines of up to €50,000 for breaches of the legislation.
"The authority itself will have the power to impose levies and fines and to suggest those to the Minister of the day," he said.
The move to establish the authority has been welcomed by Fianna Fáil's Justice Spokesperson Jim O'Callaghan.
"We have been calling for this for a long time. We proposed legislation last year that sought the establishment of an independent authority," Mr O'Callaghan said.
"I hope the legislation will be advanced by the Government very promptly, because as we know the Government brought forward legislation in 2013 and nothing happened with that legislation since," Mr O'Callaghan said.
Minister Stanton said he regretted the delay in bringing forward the legislation, but said that previous proposed measures were not sufficient.
Barry Grant from Problem Gamblers Ireland said they would be delighted to see the establishment of the Office of Gambling Regulator in Ireland.
"Ireland urgently needs a regulator and updated gambling laws.We are currently in 'Wild West' territory, with legislation going back to the 30s and 50s and no enforcement," Mr Grant said.
He also welcomed the establishment of a new Social Fund, which would come from a mandatory levy on gambling operators which would support research, treatment, prevention and education in the area of problem gambling.
Sharon Byrne from the Irish Bookmakers Association said her members welcomed the establishment of a regulator's office and wanted to see it up and running as soon as possible.
After the proposals were approved by Cabinet, Ms Byrne said she hoped this would be the last step towards the establishment of a regulator's office.