Rags-to-riches betting tycoon seals Tote deal

Founder of Betfred chain stakes £265mto become 'bookmaker to the nation'

Fred done began his bookmaking career in 1959 as a 15-year-old in Knott Mill, one of the rougher areas of Manchester, where he ran a betting shop from under a tarpaulin in a back yard, writing out wagers on scraps of paper.

Yesterday the Salford-born entrepreneur sealed one of the most tortuous privatisation bids in British history – and leapt into the big league of bookmakers.

The Government has announced that it had chosen to sell the Tote to Mr Done's firm, Betfred. The deal – which ministers promised would hand £90m each to the taxpayer and to horseracing after deductions for the company's debt and pensions – creates Britain's fourth-largest bookmaker, and is a personal triumph and a commercial coup for Mr Done. It leaves the racing industry smarting that their preferred bid failed to finish, however.

The Betfred chairman began his career as a teenage bookie when off-course betting was still illegal. He opened his first shop using the proceeds of a £250,000 bet on England winning the 1966 World Cup and has not looked back.

Plans to privatise the Tote – the state-owned bookmaker created by Winston Churchill in 1928 – have been mooted for the best part of two decades but successive governments have struggled to elicit an acceptable bid.

Betfred has agreed to pay £265m for the business, a figure which some within the racing industry have remarked was less than previous bids rejected by the last government. With the acquisition of the Tote's 500 nationwide stores, Betfred almost doubles the number of betting shops it owns to more than 1,350. Only William Hill and Ladbrokes have more presence on the high street with 2,300 stores each across the UK and Ireland.

The deal is an embarrassment for the racing industry who publicly threw their weight behind a rival bid by a coalition of investors led by Sir Martin Broughton, the former chairman of the British Horseracing Board, who had planned to float the business on the Aim junior stock market.

Speaking to The Independent last night, Barry Nightingale, Betfred's chief financial officer, said the company would now need to build bridges with the racing industry. "We haven't had a hugely fair press so far from the racing groups," he said. "But we let bygones be bygones. If we lose we dust ourselves down and get on with it. If we win we move forward and bring the losers with us. We've engaged with racing a long time."

Since its creation the Tote has had a monopoly of horse race pool-betting in exchange for a guarantee that it will pump money into the sport on an annual basis. Last year £11.7m went into the racing industry from the Tote.