Tote Bid Criticized by the EU
The Adam Smith institute, a leading free-market think tank has made a formal complaint to the European Commission over the UK governments proposed £350 million sale of the Tote to a racing industry consortium.
The institute wrote to the competition watchdog in Brussels in protest that the sale will breach EU rules on state aid.
This latest development adds more pressure to the governments sale of the Tote, it is expected that the government will reject an initial offer from a racing consortium expected to be made this week.
For a long time the government has been planning to sell the Tote, the state owned bookmaker to the racing industry. Initially the government had hoped to sell the operation at a significantly lower price than its market value but this was blocked by the EU. That intervention was partly brought about by a previous complaint by the Adam Smith Institute.
The think tank has raised new opposition. Its letter states that a sale at the reported price tag of £350 million would ‘distort the market’. The letter stated, ‘The Tote is actually worth between £250 million and £800 million. A substantially discounted sale to a commercial consortium of racecourse owners would not realise the Tote’s true value, thereby damaging taxpayer’s interests and distort the competitive market in betting.”
The letter goes on to argue that the racing industry consortium is commercially driven and that the deal could lead to a ‘domino effect’ where the racing industry could ‘accept uneconomic deals that would put the betting industry at a serious competitive disadvantage.’
A representative for Arena Leisure, a key member of the consortium negotiating to buy the Tote rejected all criticism commenting, ‘The value of the deal is only one factor the government has to consider. There are jobs, there are competition issues and the preservation of the Tote at every racecourse in Britain is at stake.
‘The racing consortium is doing its best to address all of these factors in its discussions with government.’
Civil servants are believed to have met last Friday to consider the consortium’s offer but are likely to rule that it is inadequate. That could pave the way for a rival bidder to launch a bid. Companies including Gala Coral, the gaming and betting group, are known to be interested in acquiring the Tote.
ATE Online - 2006-09-25 12:27:11