Tote to be sold on open market

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The bid team - which includes the Racehorse Owners Association, the Racehorse Association and Tote bosses - has been in talks for more than a year but its offer failed to match the Government's £400 million price tag.

Sports minister Gerry Sutcliffe said the offer had been declined with "great regret" and is appointing advisers to prepare for an open market sale.

The Wigan-based Tote has more than 4,000 staff and 450 betting shops. The Labour Party first committed to sell it in 2001 to end the Government's direct involvement in horseracing.

Mr Sutcliffe said that to go ahead with the sale at the consortium's price - a reported £320 million - would have breached European state aid rules.

Advisers will prepare a sale strategy for the Tote by the end of April. The Government is focused on generating the biggest possible returns for taxpayers - which could mean hanging on to the business until the current squeeze in debt markets which has hit deal-making eases off.

Betting chain Coral and the racehorse-owning head of stockbroker Cenkos Securities Andy Stewart have been linked with a possible bid for the Tote in a auction.

The minister invited expressions of interest from possible buyers and added the Government "stood fully behind" its pledge to share half the net proceeds of the sale with the horseracing industry.

"We will now be considering urgently how best to give effect to that undertaking in ways which meet the needs of racing, do not add unnecessary bureaucracy and are consistent with European state aid and competition regulations," Mr Sutcliffe said.

The Government first attempted to sell the business to a racing trust in 2005 before it became clear the deal would fall foul of European rules.