Gambling industry veteran Fred Done is reportedly close to selling a 25% stake in the Tote to a “consortium of racing industry figures”, Sky News reported citing unnamed insiders.It is believed that the billionaire bookmaker is in advanced negotiations and a deal could be closed within the next several weeks.
Mr. Done and his brother, Peter, own British gambling operator Betfred, which manages one of the nation’s largest chains of betting shops.
The Tote was set up in 1928. Sir Winston Churchill, who was a racehorse owner and Chancellor of the Exchequer at the time, was one of the instigators of the horserace bookmaker. The Tote was owned by the Government until 2011, when it was acquired by Betfred in a £265-million deal.
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The deal also secured Betfred with a seven-year monopoly on pool betting, which is set to expire on July 12. It became clear earlier this month that 54 British racecourses will launch new pools under the Britbet brand on the very next day after the end of Betfred’s monopoly.
Mr. Done responded to the announcement about the creation of the Britbet brand by revealing that his company’s 50 on-course shops would be closed and that it would withdraw all its race sponsorships it has inherited from the Tote.
Details about the Tote’s Sale
As mentioned above, Mr. Done would probably sell a 25% stake in the Tote, which means that he would keep his outright control over the horseracing bookmaker. According to Sky News, if a deal takes place, it would value the Tote at between £125 million and £150 million.
In other words, the consortium of buyers could pay more than £30 million for the 25% stake.
Sources have revealed that the group of investors included former British Horseracing Authority board member – Eamon Wilmott, and former Merrill Lynch banker, Alex Frost. It is believed that Mr. Wilmott will be appointed Chairman of the Tote, if a deal is finalized, while Mr.
Frost will take over as Chief Executive.
It was also understood that the consortium is planning to spend tens of millions of pounds on promoting the Tote and its services aggressively. According to sources, Mr. Done has said that if backed by significant marketing and technology investment, the Tote could increase its share in the British horseracing market, despite losing its monopoly.
Mr. Done is reportedly relaxed about the upcoming launch of the new Britbet brand as it does not have the liquidity of the Tote.
Betfred is the third largest operator in the UK in terms of betting shops operated across the country. It currently has more than 1,650 such shops. A pending crackdown on fixed-odds betting terminals is expected to hit bookmakers’ profitability significantly. The maximum stake wagered on the machines could be reduced to £2 from £100.
The scope of the Government’s actions against one of the highest grossing segments of Britain’s gambling industry is yet to be revealed.