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Betfred wins auction for Tote with £265m deal Betfred wins auction for Tote with £265m deal
(40 minutes later)
UK-based bookmaker Betfred has been chosen to buy the Tote after an auction process that began in November.UK-based bookmaker Betfred has been chosen to buy the Tote after an auction process that began in November.
Betfred, the country's fourth-biggest bookmaker, will pay £265m for the business. Betfred, the country's fourth-biggest bookmaker, will pay £265m for the public body.
Of that, £90m will go to the sport and £90m will go to the taxpayer.
Betfred will take over the Tote's monopoly on pool betting at 60 UK racecourses and online and will rebrand the Tote's 517 High Street outlets under the Betfred name.
The new business will remain the country's fourth-biggest chain of betting shops with a new total of 1,350 outlets, behind leaders Ladbroke and William Hill who have more than 2,000 each.
Betfred said it would look for ways to further commercialise the UK's racing industry.
The sale is subject to consultation with the Tote's employees and is expected to be completed in about four to eight week' time.The sale is subject to consultation with the Tote's employees and is expected to be completed in about four to eight week' time.
The Tote has 517 High Street shops and the monopoly to run pool betting online and at 60 UK racecourses. The initial agreement signals the end of a 14-year attempt by governments to privatise the betting group, which employs more than 3,500 staff.
The sale agreement signals the end of a 14-year attempt by governments to privatise the betting group, which employs more than 3,500 staff. Betfred's main rival in the auction was Sport Investments Partners (SIP), a consortium led by the British Airways chairman Martin Broughton, which was the preferred option of many in the industry.
Betfred's main rival in the auction was Sport Investments Partners (SIP), a consortium led by the British Airways chairman Martin Broughton. The Culture Secretary, Jeremy Hunt said: "It was a closely fought contest."
The Culture Secretary, Jeremy Hunt said: "It was a closely fought contest. Fourth attempt
"Of the £265m in the headline price only just over £90m will end up being paid to the Treasury." The £265m sale price is around a third lower than the £400m first offered by a consortium of racecourse owners in 2007.
That sale price is around a third lower than the £400m first offered by a consortium of racecourse owners in 2007.
That was turned down by the then-Labour government because it was backed by private equity.That was turned down by the then-Labour government because it was backed by private equity.
The consortium reformed and made another offer, believed to be about £320m, which was also rejected for not being enough.The consortium reformed and made another offer, believed to be about £320m, which was also rejected for not being enough.
An earlier sale attempt ended in 2006 after the European Commission said that the price was too low and tantamount to state aid.An earlier sale attempt ended in 2006 after the European Commission said that the price was too low and tantamount to state aid.
'Good deal'
As part of the deal, Betfred will keep exclusive control of the pool betting system on UK racecourses for seven years.As part of the deal, Betfred will keep exclusive control of the pool betting system on UK racecourses for seven years.
In return, it has committed to paying the racing industry £11m to March 2012, with payments of £9m a year for the next six years of the licence.In return, it has committed to paying the racing industry £11m to March 2012, with payments of £9m a year for the next six years of the licence.
Pool betting differs from that offered by other bookmakers.Pool betting differs from that offered by other bookmakers.
The Tote takes a percentage of stake money placed. Of this percentage, some is used to cover the Tote's expenses while the rest goes to the racing industry.The Tote takes a percentage of stake money placed. Of this percentage, some is used to cover the Tote's expenses while the rest goes to the racing industry.
The bulk of the stake money is paid out to winners.The bulk of the stake money is paid out to winners.
Commercial
Betfred's executive chairman, Fred Done, said in a statement: "Buying the Tote has been an ambition for years, so I am absolutely delighted.Betfred's executive chairman, Fred Done, said in a statement: "Buying the Tote has been an ambition for years, so I am absolutely delighted.
"The Tote is an opportunity I just could not miss. Over the coming months I will develop the Tote's relationship with the sport into a highly successful commercial partnership.""The Tote is an opportunity I just could not miss. Over the coming months I will develop the Tote's relationship with the sport into a highly successful commercial partnership."
The Tote's 517 UK shops will be re-branded Betfred, giving the new business a total of 1,350 betting shops in the UK, compared with leaders Ladbroke and William Hill who have more than 2,000 each. Betfred said job losses were likely but that these it would amount to no more than 150 from its new headcount of
Betfred wants to continue using the Tote name at the UK's 60 racecourses.Betfred wants to continue using the Tote name at the UK's 60 racecourses.
Track owners have traditionally supplied marketing, accommodation and sponsorship to the Tote.Track owners have traditionally supplied marketing, accommodation and sponsorship to the Tote.
But some are said to be less happy to provide these facilities to a private company.But some are said to be less happy to provide these facilities to a private company.
Paul Roy, chairman of the British Horseracing Authority, said the industry would do its best to work with Betfred.
"Our support for the SIP bid has been well documented and naturally today's announcement was not our preferred outcome.
"But we will now work with Betfred and the government to ensure their commitments are delivered upon, both in relation to the Tote and other areas of industry reform."
The gambling and racing minister, John Penrose, said the government had "bent over backwards to deliver a good deal for racing".The gambling and racing minister, John Penrose, said the government had "bent over backwards to deliver a good deal for racing".
He added: "Most people can't understand why, in the modern world, the government should be even part owner of a bookie. So we pledged last year to end years of dithering and resolve the future of the Tote, and today we have done just that."He added: "Most people can't understand why, in the modern world, the government should be even part owner of a bookie. So we pledged last year to end years of dithering and resolve the future of the Tote, and today we have done just that."
The Tote was set up 83 years ago by Winston Churchill to provide a safe haven for punters, as it was controlled by the state and beyond the reach of illegal bookmakers.The Tote was set up 83 years ago by Winston Churchill to provide a safe haven for punters, as it was controlled by the state and beyond the reach of illegal bookmakers.