Tote sale runners and riders ready for the race

The sale of state-owned bookmaker the Tote moved closer to the finishing line yesterday as the UK government announced that a shortlist of bidders had been drawn up.

John Penrose, minister for tourism and heritage, said the government received 18 takeover proposals for the betting business, which is expected to raise about 200 million when it is sold.

But he did not reveal who the suitors where, or how many had made it to the next stage.

Penrose said: "Following this review, a selected number of parties has now been invited to advance to the next stage of the process where they will receive more detailed information.

"The government expects to be in a position to provide a further update in the spring."

The minister confirmed the coalition government would honour a promise by the previous administration to share the proceeds of the sale with the racing industry.

But he said the proceeds will be spread out over the period of the government's spending review "because of the broader fiscal position and the need to spend the funds consistent with EU state aid rules".

Investment bank Lazard is handling the auction and it is understood that shortlisted bidders will now receive a financial report being compiled by accountant Ernst & Young.

A government source said six bidders were through to the second round.

Favourites are said to include rival bookmakers Gala Coral and Betfred, as well as an alliance headed by British Airways chairman Sir Martin Broughton.

But a high-profile team led by former Ladbrokes chief executive Chris Bell may not have made the shortlist.

The Tote's current management, which wants to return the business to its former charitable status and create the Tote Foundation, has also submitted a takeover proposal.

Wigan-based Tote, set up by an Act of Parliament in 1928, has endured a lengthy sale saga.

The current 200m reported value would mark a hefty reduction on the 400m offer submitted in 2007 by a consortium of racetrack owners, which was turned down by the government because it was backed by private equity.

The consortium re-formed soon after, but its second approach - reportedly 320m - was rejected for being too low.

Another previous sale attempt was blocked in 2006 by the European Commission, which said the price was too low and tantamount to state aid.

The most recent attempt to privatise the group was abandoned in 2008 due to turbulent market conditions as the financial crisis struck.

The government fired the starting gun on the latest sale attempt during June's budget.

Chancellor George Osborne said then that he intended to find a future for the bookmaker which "secures value for the taxpayer" but also recognises the support it offers to horse racing.

The Tote is the fourth-largest bookmaker in the UK, with more than 500 shops. Earnings increased by 13 per cent to 25.2m in the year to 31 March.

Paul Roy, chairman of the British Horseracing Authority, welcomed yesterday's update, and said "racing interests are central to a successful outcome".

He said: "The Tote was set up for racing and that must continue, but in a way that fits the modern market after the Tote is removed from the public sector."