Sportech eyes UK Tote bid

Sportech, new owners of US pari-mutuel horse racing business Scientific Games Racing (SGR), will bid for the UK Government-owned Tote as soon as the official bidding process opens, its chief executive has told eGaming Review.

Fresh from its US$83m acquisition yesterday of SGR, a business that processes US$13bn of global bets annually, Ian Penrose said Sportech, that was on the brink with huge debts five years ago, was now in a “very strong” position to significantly expand its pari-mutuel business by snapping up the UK Tote in the coming months.

“Tote and pools is what we do and clearly the UK Tote would be an ideal fit. We think the Tote has great potential and that the returns to racing could be significantly enhanced along the way. That’s the reason we would look at it very closely, good returns to shareholders and to racing,” he said.

The UK Tote is estimated to be worth between £200m to £400m, has more than 3,500 staff, 500 shops and is a major presence in all of Britain’s 60 racecourses. It also operates online and has telephone betting facilities. Investment bank Lazard is advising on the sale of the state-owned betting operation.

“Coming out of Liverpool we have a global centre of excellence for tote and the pools, and now as one of the world’s leading tote-based wagering businesses we will look at the UK Tote with keen interest,” Penrose said.

“[With the acquisition of SGR] we now process more than 15% of all tote and pools-based betting in the world. That means the case for getting involved with the UK Tote now is much more compelling now than it was yesterday.”

Penrose, however, refused to disclose how much Sportech would bid saying it “depends on how Lazards decide to conduct the sale process”. “Until they sit down and decide it’s too early to say. We’ve not officially been informed [when the bidding process is due to begin] but I would expect the bidding to begin this side of Christmas,” he added.

The Sportech chief executive called the last five years “very long” but said the business had been transformed from one with high levels of debt, two operating business losing £10m a year between them and a football pools business in heavy decline to one of the “world’s leading pools and tote operators and providers” [due to the SGR acquisition], transacting in 30 countries around the world processing US$13bn of bets, US$8bn of which are generated in the US alone.

Despite current competition rules potentially preventing the purchase, William Hill is also said to be interested in the Tote. Ralph Topping, chief executive of William Hill, has previously called the competition rules “archaic”

“To ensure that this is truly an “open market” sale we believe that the Office of Fair Trading needs to revisit the archaic competition tests which have looked at the market in terms of betting shops ““ the true market is a global one that includes online and betting exchanges. We would be disappointed if the “open market” sale was burdened with any onerous preconditions which might reduce the sale value of the Tote,” he said.

Ladbrokes and rivals Paddy Power have also expressed their interest.