Minister: Key aim of gambling law reform is to increase tax revenues

The minister responsible for casinos has admitted that raising revenue for the Treasury is a key aim of the proposals to reform the gambling laws.

The minister responsible for casinos has admitted that raising revenue for the Treasury is a key aim of the proposals to reform the gambling laws.

Lord McIntosh, a culture minister, who is steering the gambling legislation through the Lords, told a conference last year that raising taxes was an objective of the Bill which will allow Las Vegas-style casinos to be built in Britain.

His comments, at a conference held by Bacta, the trade body representing arcade owners and fruit-machine operators, stunned members of the gaming industry. The Bingo Association, which represents bingo halls, was so surprised that it submitted a formal memo to the parliamentary committee scrutinising the Bill saying it viewed the minister's remarks "with grave concern".

The Government has always insisted in briefings that raising tax is not an aim of the Bill, even though independent studies have estimated it will lead to an extra £400m in tax revenue.

Yesterday a close aide to Tessa Jowell, the Culture Secretary, said that the Gambling Bill was not framed to raise extra cash for government coffers. "The department does gambling regulation not tax. We have never had revenue generation in mind for doing this [Bill]," he said.

Sir Peter Fry, the former Tory MP who is chairman of the Bingo Association, was at the conference where Lord McIntosh made his remarks. He said he was taken aback by the minister's admission. "Others were surprised as well," he said.

Also in the audience on 26 November last year was an official from the Department for Culture, Media and Sport who, according to observers, "almost jumped out of his seat" at the remarks.

Labour MPs seized on the minister's comments last night and accused the Government of putting the prospect of extra cash ahead of the social dangers of gambling. Alan Simpson, Labour MP for Nottingham South, said the proposals would lead to money "meant for children's meals" being spent on the gaming tables. His remarks echo warnings by advisers to the Government that its proposals would offer big inducements to gamble.

The Royal College of Psychiatrists, in its formal analysis of the Bill, warned that establishing more casinos would lead to an increase in gambling. "In spite of numerous government statements to the contrary, the proposals actually give commercial considerations higher priority over social ones," it said. "The manner in which the Government proposes to update the regulation of gambling will inevitably lead to a huge increase in commercial enticement."

The Bingo Association also raised concerns about the social impact of the Bill in its formal submission to the joint committee on the draft gambling bill and highlighted the remarks by Lord McIntosh. "The Government recently stated that raising revenue was one of its objectives in reforming gambling legislation. The Association views this with grave concern," the memo, written in December, said.

It continued: "While this Government states that social responsibility will form the heart of new legislation, the policies it is putting forward are in some cases incompatible with this objective. Higher revenues for government will be generated by a significant increase in the number of people taking part in hard gambling ... resulting in more problem gamblers."

A report on the social and economic impact of the Gambling Bill, commissioned by Bacta, concluded that "the nation will gamble an extra £1bn per year by 2010" if the Bill becomes law.

The Department of Culture insisted yesterday that bringing in more tax was not an intention of the Bill, but did not deny that Lord McIntosh had made the remarks. "He doesn't recall saying it," said a spokesman. "The Bill would look very different if it was designed to raise revenue. It was designed to regulate an industry."

He admitted that ministers "don't know the impact it (the Bill) will have on the number of problem gamblers." He said the Government would review the Bill's impact on problem gambling three years after it became law.

THE FOREIGN COMPANIES POISED TO PROFIT

MGM MIRAGE

The world's largest casino company owns the Las Vegas landmarks MGM Grand and Treasure Island, along with 18 other casinos.

Lloyd Nathan, the American company's European managing director, has cited the UK as one of the best opportunities for gambling "since Atlantic City legalised gaming in 1976". It secured its UK licence by buying a stake in a Bristol casino as well as agreeing a deal with Newcastle United Football Club.

ISLE OF CAPRI

The US company operates 17 American casinos. It announced a deal last summer to build a casino as part of a £25m development next to Coventry City's ground. It has said it will donate 10 per cent of its profits towards community projects. It went on to buy a majority stake in the UK operator Blue Chip Casinos.

CAESAR'S ENTERTAINMENT

The operator of Caesar's Palace, the best-known casino in Las Vegas, is to build a casino and hotel next to the new Wembley stadium in London, as part of a $600m (£335m) joint venture with Quintain Estates. It also lobbied the Treasury about lowering tax in the run-up to the final Bill on gambling reform.

HARRAH'S ENTERTAINMENT

Founded in 1937, the company owns casinos across 13 US states, which contribute to around two-thirds of its revenue. last year it announced a joint venture with the British bingo group Gala. Their 50-50 partnership includes plans to develop up to eight regional casinos across the country.

SUN INTERNATIONAL

The largest casino-owner in South Africa has emerged as one of the biggest non-US players entering the British market. It is hoping to build four casinos. Developments are planned in Manchester, Sheffield, Glasgow and Edinburgh.

Danielle Demetriou