Bookmaker Betfred has seen off Sport Investments Partners to win the auction for the Tote in a deal worth around £265m.
The rivals were the last remaining riders in the race following a tortuous privatisation process that has dragged on for a decade.
The sale of the Tote, which employs more than 4000 staff and injects around half its profits back into the racing industry, will bring in £180m after debt and pension contributions are excluded.
The sum will be split equally between the taxpayer and the racing industry.
Betfred has also committed to commercial payments to racing of £11m to March 2012 and an expected £9m a year over the following six years.
Under the deal, it will receive an exclusive seven-year licence to operate Pool betting operations on all UK racecourses, where the Tote brand will remain.
The rival proposal by SIP, a consortium led by British Airways chairman Martin Broughton, was understood to have had the support of the racing industry.
One of the conditions of the sale is that the Tote provides pool betting on every approved racecourse. The racecourses currently supply marketing, accommodation and sponsorship to the Tote, which Betfred wants to continue but it wants payments linked to the number of meetings, quality of fields and the size of the betting pool at individual racecourses.
Reports suggest it has already run into resistance from some racecourse owners who are said to be unhappy at allowing a private owner of the Tote automatic access to their facilities, though Betfred also today committed to the establishment of Tote Racing Development Board.
Betfred’s chief executive and founder Fred Done has previously said that there will be no job losses among the Tote’s shops and staff who work at betting kiosks on the racetracks, but there could be some staff cuts at the Wigan head office.
Mr Done said: ‘Buying the Tote has been an ambition for years, so I am absolutely delighted. The Tote is an opportunity I just could not miss.
‘I love racing and I believe we have the greatest in the world. Over the coming months, I will develop the Tote’s relationship with the sport into a highly successful commercial partnership.’
Warrington-based Betfred was co-founded by Mr Done from a single shop in Salford in 1967 and it now has an estate of around 840 betting shops, with some £4bn in bets each year.
After the acquisition of the Tote, it will own more than 1350 betting shops in the UK, pushing it close to Gala Coral, which has 1600, but still some way short of Ladbrokes and William Hill, which both have over 2300 in the UK and Ireland.
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History of the Tote privatisation
The Tote was set up by an Act of Parliament in 1928. Today it runs over 500 betting shops and last year it paid out £11.7m to the racing industry after a record betting pool of £390m.
Its sale comes after more than a decade of wrangling and false starts over privatisation. One attempt was blocked in 2006 by the European Commission, which said the price was too low and tantamount to state aid.
And today’s sale price is a hefty reduction on a £400m offer submitted in 2007 by a consortium of racetrack owners, which was turned down by the Government because it was backed by private equity.
The consortium re-formed soon after, but its second approach – reportedly £320m – was rejected at the time for being too low.
The most recent attempt to privatise the group was abandoned in 2008 due to turbulent market conditions as the financial crisis struck.
The coalition government fired the starting gun on the final bid to offload the Tote into private hands during last June’s Budget, with the auction process beginning in November.
Gambling and racing minister John Penrose said the Government had ‘bent over backwards to deliver a good deal for racing’.
He added: ‘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.’
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