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The British Tote, the state-run bookmaker, is to be sold to the horseracing industry, Britain's Home Secretary Jack Straw announced today.

The decision to privatise the Tote was taken last May since when options including stock market flotation and open competitive auction were considered.

But Straw said in a Commons written reply the final decision was helped by the agreement of all relevant horseracing interests to support a single proposal to buy the Tote on behalf of racing.

At the same time the Home Secretary also announced the proposed abolition of the Levy Board, which collects a charge from horserace bets with bookmakers and distributes it to benefit racing.

The decision follows a report which found most of the Levy Board's functions, although well executed, no longer need to be carried out in the public sector.

A wide ranging consultation exercise will be launched to design alternative arrangements, Straw said.

The Tote - or Horserace Totaliser Board to give it its full title - was set up by Winston Churchill in 1928 to channel funds from betting into racing and provide an alternative to illegal off-course betting.

The sale ends years of speculation and manoeuvring since a 1989 Lloyds Merchant Bank report first recommended privatisation - dismissed by the Tote when the details emerged two years later as "nonsensical".

Straw's decision was swayed by the agreement of the racing industry to join forces which would maintain the position under which all the Tote's profits are used for the benefit of racing.

"While the price to be paid by racing for the Tote will need to be the subject of commercial negotiation, it will be important to ensure that it is a fair one which strikes the right balance between the respective legitimate interests in the Tote of both racing and the taxpayer," he said.

The Tote welcomed Jack Straw's statement outlining plans for its sale to the racing industry.

"This is great news for the Tote, for all its staff, its customers and the sport of racing," said Peter Jones, chairman of the Tote.

"We worked hard with the British Horseracing Board and the racecourses to put a proposal to government that would secure the Tote's valuable source of funding for the sport.

"The racing industry as a whole pulled together and produced a Trust structure to which the Tote could effectively be transferred. We are confident that this Racing Trust will enable the Tote to continue to grow, and produce an even greater financial return for the benefit and development of the sport of horseracing.

"The Tote was originally founded to provide funding for racing and a secure means of betting for punters.

"Today's announcement is a natural development from the original idea over 70 years ago. We look forward to discussing with government what the terms and conditions of the sale to racing should encompass.

"We have exciting plans for the future development of the Tote. It is one which will encompass new technology, new partnerships and new generations of bettors."