The Tote was established by Act of Parliament in 1928 and is now the fourth largest bookmaker in the UK. Its original purpose was to offer on-course pool betting on horseracing as an alternative to starting price betting with bookmakers and to distribute its profits for “purposes conducive to the improvement of breeds of horses or the sport of horseracing”. Tote Direct was set up in 1992 to channel tote bets from high street betting shops into tote pools. Now tote betting terminals are in more than 4500 shops across the UK, including all totesport, Ladbrokes and Coral shops. The tote internet betting operation, totebetXpress, was launched in 2002.
Betfred owns 840 betting shops but no pool business and is one of two remaining bidders in the sale of the Tote out of an original field of 18. Rival bidder is Sports Investment Partners (SIP), run by Martin Broughton, the racing aficionado and former chairman of the British Horseracing Authority, and his son. According to Betfred, its proposal ensures the Government has a complete exit from the Tote; secures value for the taxpayer; delivers support to the racing industry; and provides enhanced opportunities and security for the Tote’s employees and other stakeholders.
The Government has already pledged 50% of the net proceeds of the sale to Racing. Betfred says it supports this pledge and that under its offer that 50% represents significant value to Racing. Together with the proposals for the Tote contribution to racing, Betfred believes its offer will be worth over £120 million to Racing over the next seven years. Going forward, Betfred proposes placing the contribution to Racing on a more formal, certain and transparent basis than is presently the case and intends to enter into commercial arrangements with racecourses and others. Betfred expects a contribution of a minimum of £9 million per annum with a real opportunity for Racing to grow that amount by working with Betfred to grow Totepool and by performing under the new commercial arrangements.
Commenting on Betfred's proposal, Fred Done, Executive Chairman, said: "Betfred is the best possible business partner for Racing as it is best placed to unlock the value of the Tote. The UK has the greatest horseracing in the world and we want the sport to thrive – that’s why our bid contains a strong commitment to Racing. We have a forty year track record of delivering growth and creating jobs. We want to buy the Tote because we want to grow and develop all of its component parts; and, in the long term, I believe the pool business will be the most important of those. We have designed our offer to meet all the criteria Government has laid out. Our offer is fully financed and we have everything needed to conclude a transaction now.”
However, racing has aligned itself with the bid from SIP, writing to John Penrose, the Minister in charge of the Tote sale. "We do not believe that it should be politically acceptable to nationalize and sell an iconic British institution to a private bookmaker, a significant part of whose business is based offshore and which therefore has no obligation to pay U.K. taxes or the levy." The Government is expected to announce its decision next week. (E-05.18.11)
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