Bid by Horse Racing Consortium Not Allowed

It is very possible that the historic and long time existing story of the state owned Tote bookmaker in Britain may be reaching its final stages of existence as this week the UK government announced it had rejected the bid by a horse racing consortium to take over the operation and is now planning to put the company up for public sale. According to government spokesmen, the government will be immediately considering bids.

The Tote is an organization that operates the pool betting system in Britain and goes back to 1928. It has approximately 540 betting shops and maintains representatives at all 59 UK racecourses. In addition to this it runs an online betting service.

According to reports by the news service Reuters, the future fate of the Tote has been under consideration for over three years, and it is generally blvd that this decision by the government's decision will not be too readily accepted by the racing industry since the government is known to have made a pledge in 2001 to sell it to the industry.  The original arrangement with the government failed after the European Commission decided that the price was too low and that it actually was a form of state aid.

The Tote was evaluated by the request of the government at a reported GBP 400 million. Based on that evaluation, the racing industry was invited to put together a bid. A response came back in 2003 of GBP 320 million. The bid was rejected as being too low.  The racing industry consortium then joined forces with the management of Tote management along with Lloyds TSB bank’s private equity division in order to present another bid in the early part of 2007.

At this point the government expressed its disappointment with the extent of Lloyds TSB's involvement and the response came back for the consortium to rework their plans. This resulted in a new bid being offered last September, which was then also rejected.

It is expected by racing industry observers that a broad range of companies as well as individuals will be interested in acquiring the Tote. Because of standing laws regarding competition, major players like Ladbrokes and William Hill will not be included, but the Gala Coral which is privately owned, has already made an offer to buy the business and BetFred and Paddy Power are two other gambling firms that are expected to offer bids.

Some analysts are afraid that the business downturn which has been caused by the present economic conditions in the UK, may have an affect on the final that the eventual purchaser is able to pay, however. According to Reuters, estimates have been set at between GBP 200 and 300 million. Another possibility may be in line with a suggestion made by Paul Dixon, who is the president of the Racehorse Owner's Association. Dixon proposed a plan that would split the Tote between the horse racing industry and an agreeable industry partner.

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