State-owned horse racing bookmaker the Tote is to be sold off on the open market, according to reports.

The government has rejected a £320 million bid from a racing consortium for the Wigan-based Tote organisation and is expected to start an auction next month, it was reported.

With betting group Coral likely to be in the running, the move could herald an end to the long-running saga of the Tote's sale, which was a Labour Party manifesto commitment back in 2001.

The consortium, which included the Racehorse Owners' Association, the Racehorse Association and Tote bosses, made a bid in January this year.

But the process ran into difficulties over its financial make-up and turbulent market conditions.

Accountants Price Waterhouse Coopers, who are advising the government, placed a price of £400 million on the Tote.

It is feared that the government accepting a significantly lower price would fall foul of European Union state aid rules.

The market sale decision could be formally announced before Parliament goes into recess on Wednesday.

Gala Coral, which operates betting, bingo and casinos, has already told the government it would be willing to offer £405 million, it has been reported.

Other bidders could be Ladbrokes and William Hill, although they would face stiff competition hurdles.

Proceeds from the Tote sale will be split between racing and the Treasury.

The Tote has 540 betting shops and reported group turnover of £2.48 billion for the year to March 31 this year, up 12 per cent.

Gross profit for the year was almost £158 million, up from £140 million.

Plans by a horseracing consortium to buy the Tote were thwarted in September last year after the Department for Culture, Media and Sport, which is overseeing the sale, failed to reach an agreement with the group.

The European Commission also blocked a move to sell the Tote in early 2005.

This was on the grounds that the price tag was too cheap and was effectively "state aid".