Gala Coral, the UK gaming group, has entered the frame to purchase the government-owned Tote with a £405m offer. 

The offer consists of £325m in cash for the Tote's 540 betting shops, and £80m for its on-course pool betting, internet betting and telephone betting operations, which it would then sell on to the racing industry for £1.

In September, the government rejected an offer from a racing industry consortium of just over £300m for the Tote. PriceWaterhouseCoopers, who are advising on the sale, have valued the business at £400m. 

The government initially attempted to sell the Tote to the racing industry in 2005 for a below-market price, but was prevented by the European Commission who ruled that the deal breached state-aid regulations. 

A new consortium from the racing industry is now reported to be preparing a bid in response to Gala's offer. 

Last year, the Tote reported a turnover of £2.21bn, up 16.9% on the previous year.