A decision has been made over the future of the Tote bookmaker which is currently state owned. Betfred is to purchase the group following a bid of around £265 million, half of which will be given back the racing industry. If the previous government had sold the Tote the amount received would have been around £400 million.

While the industry maybe somewhat disappointed as they had been in favour of the rival bid from SIP, a consortium led by British Airways chairman Martin Broughton, the industry will benefit initially more from the Betfred bid which was believed to be the highest of the two.

The Culture Secretary, Jeremy Hunt said: "It was a closely fought contest.

"Of the £265m in the headline price only just over £90m will end up being paid to the Treasury."

As part of the deal, Betfred will keep exclusive control of the pool betting system on UK racecourses for the next seven years.

Betfred will pay the racing industry £11m to March 2012, and further payments of £9m a year for the next six years of the licence.

Fred Done, Betfred's executive chairman, commented: "Buying the Tote has been an ambition for years, so I am absolutely delighted.

"The Tote is an opportunity I just could not miss. Over the coming months I will develop the Tote's relationship with the sport into a highly successful commercial partnership."

The gambling and racing minister, John Penrose, added that the government had "bent over backwards to deliver a good deal for racing".

"Most people can't understand why, in the modern world, the government should be even part owner of a bookie. So we pledged last year to end years of dithering and resolve the future of the Tote, and today we have done just that."

The bidding process began at the end of 2010 and there will also be some relief that it has concluded. The Tote was set up more than 80 years ago to provide a safe place for gamblers and to reduce illegal bookmakers. Over the last 14 years governments have tried to sell the public asset and reports suggest that in 2007 Gala Coral had been interested in purchasing it for around double the amount that is currently being offered.

The Tote enjoyed a monopoly of horse race pool-betting in exchange for a guarantee that money was pumped back into the sport. The company which is based in Wigan, has around 4,000 staff and puts half of its profits back into racing (£19m in 2010)

Chancellor George Osborne said in 2010 that he wanted to sell the Tote and while he recognised the importance of getting the right deal for the racing industry he promised to get a good deal for the tax payer.

The Jockey Club opposes the sale and wants the Tote to remain independent.

More About the Tote

The "Tote" short for Totalisator, has been offering it's own brand of sports betting in the form of pool betting at British racecourses since 1929. Although nowadays you are no longer limited to being at the racecourse, or even the UK, to place a pool bet on a British horse race. And unlike traditional fixed odds betting, pool betting odds from Totesport are up to 70% better. The Tote have their own online sports betting site with clients worldwide (exc USA). And many High Street bookmakers including Coral's, Ladbrokes and over 1,600 independent bookmakers as well as Betfair betting exhange now offer Totesport horse racing betting to their customers.

How does Tote Betting Work?

All the bets placed on a race with Totesport are put in a pool, a deduction is made to cover costs and the Tote's contribution to UK horse racing. The remaining sum of money in the pool is then divided by the number of winning tickets to give a dividend, including a GBP 1 stake. Odds can fluctuate according to the pattern of betting, and no bets are accepted once the race has started.

The Tote has 517 High Street betting shops and the monopoly to run pool betting online and at 60 racecourses in the UK.