The Pacific Consortium made an all-cash bid of Aus$7.2 billion, a sweetened offer from last year's cash and scrip offer.
The Pacific Consortium -- consisting off Kohlberg Kravis Roberts, Macquarie Group, First State Superannuation Scheme and North Haven Infrastructure Partners -- made an all-cash bid of Aus$7.2 billion, a sweetened offer from last year's cash and scrip offer.
An all-cash bid does not require regulatory approvals.
Tatts had rejected the consortium's first proposal in December and said it was not superior to a tie-up with Tabcorp, which the firms have pursued for years in a bid to cut costs and chase opportunities globally.
In October, they announced a merger to create an Aus$8.6 billion (US$6.5 billion) powerhouse taking bets on horse racing and sports events across Australia.
But on Wednesday Tatts said in a statement it "is undertaking a full analysis of its key terms, underlying financial assumptions and conditions". The fresh Pacific Consortium bid values each Tatts share at Aus$4.21.
"Once this review is complete, an update will be provided to the market."
Under the previous proposal, Tatts was valued at between Aus$4.40-$5.00 per share. The Tabcorp merger valued Tatts at Aus$4.34 per share.
Tatts' stock prices jumped 1.61 percent to Aus$4.42 Wednesday, while Tabcorp fell 0.63 percent to Aus$4.70.
Concerns about the Tatts-Tabcorp merger were raised in March by the Australian Competition and Consumer Commission in relation to gambling services in Queensland state. The competition watchdog is due to announce its final decision on May 4.
Tabcorp has also lodged an application with the Australian Competition Tribunal, which hears applications for review of ACCC decisions, for merger approval.
Tatts Group has a betting shop network in the states of Queensland, South Australia and Tasmania and also operates a lotteries business.
Tabcorp Holdings runs similar operations in Victoria and New South Wales, with a broadcasting and media arm built around Sky Racing.
Both companies also compete in online gambling.