UK govt hires Goldman Sachs to handle Tote sale

LONDON, April 4 (Reuters) - The British government said on Friday it had appointed U.S. investment bank Goldman Sachs (GS.N) to run the auction of state-owned bookmaker the Tote.

Last month a government source told Reuters the bank would be charged with drawing up with a list of the most lucrative options by the end of April or early May.

After years of deliberation, promises to the horse racing industry and a number of failed sale attempts, the government has finally kick started an open auction of the Tote.

It now has a three main options: selling the entire business, a piece-by-piece breakup or keeping the status quo until credit markets improve.

The problem that the government faces is that having originally promised to sell the Tote to the horse racing industry it has now said it will return half the profits instead.

But having seen European regulators already scupper one attempt to sell the Tote, it has to convince EU lawmakers that returning half the proceeds does not constitute state aid.

Having previously been valued at more than 400 million pounds ($805.6 million), analysts say the credit crunch and consumer spending worries have cut the Tote's worth to anything from 200 to 350 million pounds.

Despite borrowing worries of its own, privately-owned Gala Coral is expected to be among the front runners, while horse racing industry players have also put forward a new plan.

Football pools firm Sportech (ROD.L) has said it is keen to take on the Tote's pool betting operations, while according to media reports privately-owned bookmaker BetFred and listed rival Paddy Power (PAP.L) are also interested in the 540 shops. (Reporting by Marc Jones; Editing by David Cowell)