One of the UK's leading horseracing firms is considering equipping its courses with roulette wheels and poker tables to exploit gambling liberalisation.

Centres of the so-called sport of kings may host casinos and gaming halls, Arena Leisure has said, warning that horseracing faced a "challenging and important period".

The move would pitch Arena courses such as Windsor and Lingfield against towns such a Blackpool, which are also set to become gaming centres if the government backs recommendations by former Treasury adviser Sir Alan Budd to relax gambling regulations.

"We have initiated detailed research into the opportunities that this framework would present our racecourse operations," Arena said in earnings statement on Tuesday.

"This will put us in the best possible position to take advantage of the proposed changes when they are expected to become law in 2003-04."

New channel

While Tuesday's statement revealed the firm chalked up a pre-tax loss of �6.2m last year, managing director Ian Penrose said operational expansions had allowed the firm to secure a "pre-eminent position".

"We now have a great platform on which to build all elements of our business," he said.

The firm's racecourses, which also include Wolverhampton, Worcester and Southwell, ran at a profit over the last half of 2001.

And 1 May will see the launch of the Attheraces TV channel, a joint operation with Sky and Channel 4, with rights to broadcast racing from 49 courses, compared with the 10 signed to rival the Racing Channel.

Attheraces programmes broadcast through Sky will reach nearly 6 million homes in the UK and Ireland.

"This brings 200 times more potential viewers than were previously subscribing to watch racing programmes," Mr Penrose said.

The channel is part of an Attheraces business which will allow racing fans to place bets through their TV sets, and will encompass internet, mobile and radio media.

Row with bookies

But Arena said little of the dispute with bookmakers which threatens to bring blank screens to betting shops after 30 April, when a contract for TV feeds runs out.

Arena is reported to be demanding �40,000 per fixture for viewing rights for its courses, compared with the current �9,000-per-meeting deal.

The firm on Tuesday noted the introduction of tax free betting, "and its consequential increase of around 40% in betting shop turnover on horseracing".

In the City, Arena shares stood 0.25p higher at 40.5p in lunchtime trade on Tuesday.