Gambling tenses for game of roulette

A review of Britain's gaming laws will throw up as many winners as losers

Second guessing the outcome of the Gambling Review is a mug's game that makes predicting the result of the Grand National look easy. After all, the first significant overhaul of the UK's betting industry since the 1960s is to be supervised by a quango manned by a bizarre assortment of dignitaries. A clinical psychologist, the former chief constable of Hampshire and the man who runs the favourite nocturnal haunt of London's media types are among 10 members charged with bringing the regulation of gambling into the 21st century. At least the Review's chairman, Sir Alan Budd, a former member of the Bank of England's Monetary Policy Committee, has some experience of creating harmony out of chaos.

It will not just be the dedicated punter watching the debate with interest. The Review, set up by the Home Office and due to begin its deliberations shortly, may also have a critical impact on the intention of two bookmakers, Corals and William Hill, to float on the stock market later this year. In the opposing camp is the racing industry, determined to escape its financial reliance on the big bookies. And the operators of Britain's 120 casinos are looking for a release from the regulatory straitjacket which has stunted their growth.

The odd piece of legislative amendment apart, the laws on gambling in the UK have spent the last 40 years in a time warp. Inevitably, some of the regulations are now anachronistic, like the rule which only allows betting shops to open in the evening during summer months. And the insistence that some shops can contain no more than two slot machines. Not to mention the decree banning casinos from housing amusement machines which pay out more than £1,000. These and other discrepancies should be ironed out, but don't bank on it. "I wouldn't say the Home Office is puritanical, but it's not exactly permissive," notes one observer.

Betting on horse racing is likely to provoke the most heated debate. An industry which has remained largely in the hands of high-street betting shops and on-course bookies is being transformed by the growth of telephone punting and by the emergence of online gambling. Furthermore, the owners of Britain's betting shops - principally Corals, Ladbrokes, William Hill and Stanley Leisure - are determined to protect their investments by preventing other venues from providing gambling facilities.

But the British Horseracing Board (BHB), the sport's governing body, wants to erode the power of its bookmaking opponents by pushing for betting kiosks in pubs.

Tristram Ricketts, chief executive of the BHB, says: "I think that kiosks would take a substantial amount of business away from bookies so there is a certain amount of self-interest in their opposition."

He hails the example of Australia, where this experiment proved successful, though not without complaints from those who feel betting in bars ruined the atmosphere of pubs. Of course, the BHB, which each year fights for the share of bookmaker's profits it uses to fund the sport, has an axe of its own to grind. And John Brown, chief executive of William Hill, believes that such a step would bring the industry into disrepute, a view shared by the anti-gambling lobby. "It would be a bad idea for gambling to be going on in an area where people are drinking," he says.

Then again, he would say that. In reality, the growth of telephone and internet betting is threatening to reduce the debate on high-street betting shops to little more than a sideshow. All the major bookmakers have embraced the new channels and part of the Review's remit is to look at the effect of new media.

The internet has allowed bookmakers to offer a global service, but not everybody is happy. In the US, internet betting is illegal. And the UK Treasury is separately reviewing gambling taxation and has indicated a wish to bring off-shore betting sites under the UK tax banner. John Brown is concerned by how easy it is to set up online sites. "At present you only need a bookmaker's permit," he says. "I think they should have more formal legislation surrounding it."

The question of licensing and taxation of off-shore internet sites is crucial for the industry. Corals, owned by Deutsche Morgan Grenfell Private Equity, is set to float later this year and analysts have predicted it could fetch £1bn. But much of that valuation lies in expectations for the growth of online gambling.

The impact of regulation has also affected the value of quoted casino operators. "With any degree of logic, the Review should recognise that casinos operate at by far the most highly regulated end of the market," said one operator.

That regulation comes in several forms, notably the arduous process undertaken before licences are granted and the obstacles put in the way of punters wishing to become members. Casino operators would like venues to put on entertainment and offer new betting opportunities, such as on sporting events.

But the Government seems not to have forgotten the industry's sleazy image, and there are indications that it is in no mood to loosen the regulatory straitjacket. Last month, the National Audit Office launched a separate review of the Gaming Board, the industry's regulatory board, in the belief that it has failed to keep some of the more dubious characters away from the gaming tables.

Juggling these vested interests is the task which Mr Budd and his colleagues must confront. Faced with an enquiry which could last a year and will throw up as many losers as winners, he may come to reflect that the job of getting economists to agree on interest rates was a breeze by comparison.

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