Gala Coral, the betting, bingo and casino group, has held exploratory talks with representatives of Britain’s leading racecourses over a potential £300m-plus joint-bid for the Tote, the state-owned bookmaker.

Neil Goulden, Gala Coral’s chief executive, hosted a meeting last Friday at the group’s Barking head offices with David Thorpe, chairman of the Racecourse Association (RCA), and Mark Elliott, the chief executive of Arena Leisure, the operator of seven tracks including Doncaster, Windsor and Lingfield.

The talks examined whether the owner of the Coral betting chain and Britain’s 60 racecourses should team up to bid for the Tote. The tracks are particularly interested in the Tote’s exclusive seven-year licence to operate pool betting.

The Government last month appointed Goldman Sachs to auction the bookmaker - which owns 540 shops - after a tortuous attempt to sell the business to a racing consortium.

Having made a manifesto pledge to sell the bookie to racing, the Government became embroiled in fruitless negotiations with the RCA, an owners’ group and Tote management.

After racing cut its proposed offer last year from the Government’s valuation of £400m to £320m - reflecting weaker trading and the tightening credit markets - ministers’ patience snapped.

Goldman has been instructed to maximise proceeds from the sale - including breaking up the Tote if necessary - with the Government vowing to return half of the sum to racing via a mechanism yet to be decided. The auction is yet to begin.

While Gala Coral is principally interested in adding the Tote’s betting shops to its near 1,600-strong estate, the courses are considering taking a stake in the pool betting wing, whose turnover rose 17pc last year to £323m.

The courses have some leverage over any sale because the Tote has no written contracts with them over access to the tracks. Conceivably, they could drive a hard bargain with any new owner of the Tote over its right to use betting terminals on their courses - though any major showdown is thought unlikely. One source said: “The courses don’t want to own the Tote outright but they do have a vested interest in the outcome of any sale.”

Britain’s tracks are also concerned over how the Government distributes sale proceeds to racing, fearing they could rank below less commercial organisations such as the National Stud and racehorse welfare groups.

Mr Thorpe would only say: “Since the racing bid was rejected, we have discussed the matter with a number of organisations. I have no comment to make on any meeting that has taken place.” Gala and Arena declined to comment.

Having the racecourses onside could smooth any bid by Gala, which faces competition from rival bookies and private equity groups.
(Source: Telegraph)