Government's £100m Tote sale faces Brussels inquiry

The European Commission has launched a formal investigation into the Government's proposed sale of the Tote to the horseracing industry on fears the deal may be anti-competitive and breach state aid rules.

The European Commission has launched a formal investigation into the Government's proposed sale of the Tote to the horseracing industry on fears the deal may be anti-competitive and breach state aid rules.

Officials in Brussels are concerned that the Tote's sale to the Racing Trust, a body controlled by the British horseracing industry, for about £100m is "well below" fair market value. As such, it may amount to unfair state aid.

Neelie Kroes, the Competition Commissioner, said, "I support the British government's objectives of opening up the UK gambling market. But I am not convinced that the way this is carried out, by selling the Tote well below market value, is necessary or proportionate to achieving this. Such a measure could distort competition in the betting market."

The commission could force the Racing Trust to pay the full market price for the Tote - estimated to be more than £400m - if it rules the Government's selling price is too generous to the racing industry. This may trigger an open auction for the 457-strong betting shop business.

The Tote has operated a monopoly on pools betting since its creation in 1928, and the Racing Trust, after buying the business, will have an exclusive licence to operate pools betting in the UK for seven years. After that it will be open to competition.

Lord Lipsey, the chairman of the shadow Racing Trust, said: "We believe the sale does not contravene state aid rules, so this is disappointing. Pool betting accounts for less than 5 per cent of all betting in the UK, and this sale will have no distorting effect on trade.

"The Tote has already gone through a lengthy period of uncertainty. Further delay due to a formal investigation only hinders its commercial development."