Horse racing could disappear from Channel 4, where it has been a mainstay of its daytime schedules for a quarter of a century, unless leading bookmakers agree to pay up to £8 million a year in production costs.

A spokesman for Channel 4 today conceded that "all options are being discussed", and that meetings between the channel, the coverage's producers and the racing bodies would be on-going until the end of this month.

If racing were to be discontinued by the television channel, the impact will be felt beyond the racing industry. Sponsorship and prize money would be likely to decline sharply, ultimately leading to a drop in bloodstock values. Media rights fees are also likely to fall - without competition for the major meetings, the BBC is unlikely to be willing to offer significant amounts.

But it could be the bookmakers who end up being hardest hit - every horse race that is shown on terrestrial television has a 300 per cent increase in betting takings.

Channel 4's withdrawal would be another blow to the televising of the sport, following the previous, commercial collapse of a satellite betting channel last year.

The BBC, which has continued to broadcast racing despite having lost the rights to certain key meetings, such as the annual Cheltenham National Hunt festival each March, is likely to pick up the rights to some of the bigger, more prestige meetings. Satellite channels At The Races and Racing UK are also now widely available on subscription as well as being shown in betting shops and pubs. Racing UK has 30,000 subscribers paying £20 per month.

But it is unlikely that the scale of C4's racing coverage - which in 2004 amounted to 88 days' racing from 30 courses - could be replaced.

Neither of the main horse racing authorities, the British Horseracing Board and the Levy Board, are thought likely to be able or willing to contribute to C4's demands.

It is not uncommon for some sports to pay the television production costs for coverage of certain events and then to give the programme to the boradcaster, in order to satisfy their sponsors and ensure a wider audience for their sport.

But this practice is usually restricted to minority sports, used for programming found in schedule backwaters, and not for higher profile events such as racing, which draws a strong and loyal audience.

Yet despite the valuable "free" promotion that his company and other bookmakers receives, David Harding, the chief executive of William Hill, does not appear willing to countenance contributing to C4's continued coverage of the sport. "My feeling is that it would set a dangerous precedent to start giving money away like that, and in any case the amount they are asking for is exorbitant," Mr Harding was reported as saying.

"From racing's point of view Channel 4 is a key shop window, but our own business is less dependent on racing all the time."

Shares in William Hill were trading down 1p at 524p at lunchtime today.

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