Tote sale put on ice as government lawyers seek watertight deal

THE sale of government-owned bookmaker the Tote has been delayed as a result of concerns over European state aid laws.

The hotly contested auction has been narrowed down to two final bidders - Betfred, Britain's fourth-biggest bookmaker, and British Airways chairman Martin Broughton's Sports Investment Partners (SIP) vehicle.

However, government lawyers have been poring over the fine details of both bids as they look to avoid any possibility of the eventual decision being subject to a legal appeal with EU state aid regulations proving the most complex obstacle.

Both sides have sought to woo Britain's influential horse racing lobby offering incentives such as financial support and boardroom representation.

"State aid has been the biggest sticking point. That is a big consideration," one source said. "Whatever the government come up with they have to be as sure as they possibly can that it's not legally challengeable either on the basis of state aid or anything else."

Sources say if SIP wins, the government could be subject to a legal appeal from Betfred on the grounds that rules on state aid require it to accept the offer from the highest bidder.

A spokesman for the Department of Culture, Media and Sport said there would be no announcement yesterday, as initially planned, but that one could still come as early as today.

The government had said its decision would not be based purely on valuation and the successful bidder would need to provide value for the taxpayer, support for the racing industry and acknowledge the interests of Tote staff.

Both offers are around 200 million and both argue their bid will deliver more to the taxpayer following the repayment of the Tote's debt, contributions to its pensions deficit and annual contributions to racing.

SIP's offer has strong support from the horseracing industry which favours its proposals to list the Tote on AIM, giving the industry a 10 per cent stake in the new entity and offering "racing friendly investors" such as owners, breeders, trainers and racecourses a further 25 per cent.

The government is selling off assets as it seeks to reduce a mountain of debt and a swollen deficit.