UK gambling group the Tote will now be put up for sale on the open market, according to reports.
The move follows the government's rejection of a £320m bid from a consortium made up of the management and employees of Tote, otherwise known as the Racecourse Association and the Racehorse Owners' Association.
Potential bidders are expected to include private equity-backed gambling business Gala Coral.
PricewaterhouseCoopers is advising the government on the sale.
The auction is expected to begin in January, although the ministers are said to be contemplating whether to wait for the market to recover, which could extend the process to beyond 2008.