Business

Tote bid result: Good for racing?

Tote betting shop at Lingfield Park racecourse in Surrey
Image caption The Tote's history dates back as far as 1928

It has been confirmed that bookmaker Betfred is to buy the state-owned Tote business for £265m. But what will the sale mean for punters and those in the horseracing industry?

Plans to privatise the Tote have been under starter's orders for more than two decades.

Back in 1989, when Margaret Thatcher was still in power, a government-commissioned study by Lloyds Merchant Bank recommended that the state-owned bookmaker should be sold off.

But John Major's administration went off the idea after the horseracing industry warned that it could lose income as a result.

With a change of government from Conservative to Labour, selling the Tote was back on the agenda.

But although Labour's 2001 election manifesto included a firm commitment to privatise the organisation, it has taken a further 10 years and a further change of government to put it into practice.

Under the terms of the deal, Betfred, the UK's fourth-biggest bookmaker, will pay £265m for the business, which employs more than 3,500 staff.

John Heaton, who was the Tote's chief executive until 2004, thinks the lengthy delay in securing the deal has not paid off.

"The previous Labour government had an offer of £400m on the table and rejected it," he told the BBC.

"So to finish up with half of that just a few years later does seem rather odd."

Winston Churchill

The Horserace Totalisator Board, to give it its full name, was set up by Winston Churchill in 1928.

Image caption Betfred beat the Sports Investment Partners consortium to clinch the Tote deal

The aim was to channel money away from betting and into racing, as well as offering punters a safe haven away from the clutches of illegal bookies.

Since its inauguration, the Tote has enjoyed a monopoly of horse race pool-betting in exchange for a guarantee that it will pump money into the sport on an annual basis.

As a result, the horseracing industry has come to depend on it as a reliable generator of large amounts of income.

Last year, the Tote contributed £11.7m. Of that, more than £7m was paid to racecourses up and down the country, while more than £4m came via sponsorship deals covering more than 700 events, including the Totesport Cheltenham Gold Cup.

As the Tote's new owner, Betfred will keep exclusive control of the pool betting system on UK racecourses for seven years and has pledged to contribute at least £122m to horseracing during that time.

Many racing enthusiasts point to the existence of the Tote in its present form as the reason for the relatively high number of racetracks - about 60 - in the UK.

They fear that some of the smaller, less profitable venues are certain to go to the wall if a commercially-run Tote bows to pressure from leading racetracks for a bigger share of the spoils.

"The Tote only makes money at 12 courses," says former Tote boss John Heaton, "but it pays a percentage of its turnover to every course.

"So if the racecourses are prepared to band together, fine. But if they're not, then there could be issues."

But from the coalition government's point of view, the desire for a smaller state and the need to plug the UK's budget deficit both pointed to a sell-off.

In the words of the gambling and racing minister, John Penrose: "Most people can't understand why, in the modern world, the government should be even part owner of a bookie."

Rebranded shops

As for what it means to the ordinary punter, the Tote has more than 500 High Street betting shops which will now be rebranded as Betfred outlets.

That will expand Betfred's presence to about 1,350 High Street shops nationwide - still some way behind William Hill, Ladbrokes and Coral, but close enough to start snapping at their heels.

However, at present, it is unclear what will happen to the branding at the Tote's on-course outlets at every racetrack in the country.

"It's possible that the presence on the racecourses might change," says Mr Heaton.

"Betfred will, of course, have to enter into negotiations with the racecourses for the right to trade on their courses."

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