Is it a racecourse? Is it a casino? No, it's a racino

Arena Leisure, the racetrack operator, outlined plans yesterday to build Britain's first "racino", a combined racing and casino venue, in Wolverhampton.

Mark Elliott, the chief executive, said he would submit a planning application in the next couple of months for Wolverhampton racecourse to expand the existing hotel from 54 beds to 170, build a new leisure complex with a swimming pool and incorporate a casino within the racecourse.

At a cost of £20m, the "racino" would be the first of its kind in the UK; the US and Canada already boast about a dozen. Unlike many other racecourses in Britain which are in rural areas, Wolverhampton racecourse is in the city centre and therefore a good candidate to be combined with a casino.

Wolverhampton City Council has been shortlisted for one of the eight large casino licences up for grabs under the new Gambling Act.

Arena tried and failed to win permission to build a racino in Wolverhampton a couple of years ago under the old gambling legislation, because of the "visual impact" of the scheme. Mr Elliott was confident the new designs fully address previous concerns.

Arena reported a 7.9 per cent rise in first-half profits to £2.2m, with revenues climbing 5.7 per cent to £21.9m. Profits could have been higher still, by about £300,000, if racecourse attendances had not been hit by the World Cup - June typically accounts for nearly a third of attendances in the first half. Attendances were down 4.6 per cent in the first six months to 216,000. While disappointing, Mr Elliott said this compared favourably with a fall of 10 per cent across the rest of the industry.

Arena expects a big boost to revenues from major new developments at Lingfield Park and Doncaster. It took over Doncaster racecourse from the local authority operators last December and the £32m redevelopment is on track to re-open in August next year, in time for the St Leger, which had to be staged at York this year.

Arena is part of an industry consortium bidding for the Tote, the state-owned bookmaker, and submitted a formal offer last Friday. It is believed to be less than the £400m the Government was looking for, but Mr Elliott stressed that it was a "compelling offer" which would safeguard the Tote's 300 jobs in Wigan. He also pointed to the Government's 2005 election manifesto commitment to sell the Tote to the racing industry.

However, a previous attempt to sell the Tote to racing for a knockdown price of £150m was nipped in the bud by European regulators which regarded it as illegal state aid. Gala Coral is known to be interested in the Tote's 540-strong chain.