EU probe threatens Labour's plan to sell off the Tote - Tuesday 12th of April 2005

The European Commission competition supremo, Neelie Kroes, is planning a full investigation into the sale of the Tote, the pooled betting company.

The revelation will throw into doubt the Government's £200m proposed sale of the owner of 457 betting shops across the UK to Racing Trust, which is controlled by the British horse-racing industry.

Sources revealed that the Commission was concerned that the deal might break strict state-aid rules. In particular, a source said that Ms Kroes was taking "a much closer look" at the Tote because, prior to the sale, the Department for Culture, Media and Sport (DCMS) would assume full control of the business, which is not technically government owned. This could break European laws, said the source.

Ms Kroes's intervention could open the door to a private bid for the Tote, which has already attracted the attention of venture capitalists that believe that the business could be worth up to £500m. Companies linked to the Tote include CVC, which sold the bingo and casinos operator Gala for £1.2bn in 2003, and Charterhouse, which owns the betting firm Coral Eurobet. William Hill, the quoted bookmaker, is also known to be interested.

Ms Kroes is expected to announce the investigation into the Tote, which turns over more than £600m, after the general election. However, sources have revealed that European officials have already alerted the DCMS to the forthcoming probe and have started to circulate the paperwork within the Commission to launch it.

The sale of the Tote is a long-held government manifesto pledge, but the process has been mired in controversy. The Government announced the sale to Racing Trust in 2000 but this angered rival bookies. They claimed it would give racing an unfair competitive advantage.

A spokesman for Ms Kroes said: "No decision has been taken by the Commission on whether to open a formal state-aid inquiry or not." The DCMS declined to comment.

The Tote was launched in 1929 and offered pool, as opposed to fixed-odds, betting. In recent years it has expanded into telephone and internet gambling

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