Controversial Gambling Bill to be dropped, ministers warn

Jowell prepares to dump measure after overwhelming opposition. Fears that issue would dominate election

Ministers are preparing to abandon their controversial attempt to relax gambling laws rather than allow the issue to dominate Labour's election campaign.

Ministers are preparing to abandon their controversial attempt to relax gambling laws rather than allow the issue to dominate Labour's election campaign.

The Government is braced for renewed attacks on all sides when the Gambling Bill returns to Parliament this week. Proposals to allow new super-casinos and £1m jackpot fruit machines are fiercely opposed by moralists and existing operators alike.

Tessa Jowell, the Secretary of State for Culture, Media and Sport, is facing a long battle over the measure in the Lords. Senior government figures last night said she was not prepared to concede further to British gambling interests. The decision will anger those who have been demanding the liberalisation of gambling.

British casinos are furious with a proposal to allow giant US gambling firms to enter the market on what they say are unfair terms. Bookies and amusement arcade operators are also unhappy about sections of the legislation intended to combat compulsive gambling. But any new compromise would leave the Government open to criticism from those concerned by gambling addiction.

The Bill, which ministers had expected to ease through Parliament, became a major political controversy before Christmas. That was defused when Ms Jowell agreed to limit the number of new foreign-run casinos. In a protest campaign, which opens today with newspaper advertisements, the British Casino Association is urging that the home-grown gambling industry should be allowed to benefit from freer laws.

The Government has decided to allow eight new "mega-casinos" to have up to 1,250 "category A" fruit machines each, offering £1m jackpots. Ms Jowell wants them introduced as a trial. She has been backed by gambling charities and the churches.

Jonathan Lomax, of the Salvation Army, said: "These machines are untested in the UK and we would not want them spread across the country. They are among the most addictive forms of gambling."

But Penny Cobham, of the British Casino Association, said: "We cannot fathom why the Government has chosen to experiment with a large increase in gaming machines in new casinos while restricting our members and their guests from participating in these regulation changes."

Tory and crossbench peers will strive to amend the Bill in the Lords. Baroness Buscombe, a senior Tory peer, said: "On the one hand, the Government is allowing massive new casinos to operate with a freedom that is anti-competitive. On the other, it is going to say that an arcade can only give a £5 teddy bear as a prize, not an £8 teddy bear."

A senior Whitehall source said: "It's like a poker game. The most powerful weapon the Lords have is time, and time is thought to be in short supply. But the opponents are in danger of overplaying their hand.

"Tessa will listen to constructive ideas, but there are also red lines. Rather than cross a red line, we will scrap the Bill and bring it back in the next Parliament."