Gambling with our future

Casinos wherever you want them; fruit machines that you can play on credit in the hope they will spi

It was commonplace to say in the 20th century that the Labour Party owed more to Methodism than Marxism. In the 21st, it will owe nothing to either. The Nonconformist tradition encouraged an abhorrence of gambling. The fleecing of gullible punters was a great evil to the reformers of late-Georgian Britain, particularly when governments took a cut of the profits. In 1807, after his first parliamentary success in the fight to end slavery, William Wilberforce turned to his fellow evangelical Henry Thornton. "Well, Henry, what shall we abolish next?" he asked. "The lottery, I think," Thornton replied. These were not flippant men and Thornton wasn't joking. The campaign they began finished off lotteries by the 1820s.

Whatever you think about religious objections to gambling - it encourages the worship of money and persuades people to place their faith in chance rather than God - on one point atheist and believer must agree: there are few means more ruthlessly efficient for redistributing wealth from the poor to the rich. It may not be quite comparable to a slave working for a master for nothing, but there is a connection, which our government has no desire to break.

New Labour has rediscovered the taxation policies of the Georgian oligarchy that Wilberforce's generation assumed it had destroyed. The children of the chapel and the manse adore gambling, therefore. The artistic pleasures of their civilised bourgeois supporters - the Royal Opera House and so on - depend on it. Without gambling, the production of millionaire athletes will halt and national pride take a terrible knock. Gambling has become an instrument of urban renewal and an essential source of revenue to a chancellor who would rather milk foolish punters than tax the rich. Signs that the public may be wising up and abandoning gambling provoke panic in Whitehall. In this state of emergency, new Labour would rather transgress its ideological taboos by nationalising the Lottery than allow the gambling boom to falter.

In the coming weeks, Tessa Jowell, the culture minister, will be considering responses to her white paper on the "modernisation" of gambling. It is her bad luck to be stuck with the public image of a nannying prig. Her friends say the charge is the baseless creation of upper-class Tories, whose prejudices against powerful women were formed when their heartless mummies abandoned them to the care of sadistic servants. In this, Jowell's defenders are surely right. There is nothing nannyish about her views on gambling. She is its most permissive political champion since the Swinging Sixties. The betting corporations are astonished by her laxity - and grateful. When they began lobbying her, they never expected so much, so quickly. As with Enron and Arthur Andersen, the success of the gambling interest shows how this government finds its friends in the seediest corners of capitalism.

The growth potential of the casino industry looked modest in the mid-1990s. The Gaming Board for Great Britain repeated the received official wisdom in 1995. Relaxation of tight restrictions would allow crime to flourish. Everyone in the industry knew that control of casinos has a twofold attraction to gangsters: they allow organised crime to launder stolen money while making huge and perfectly legal profits.

The recent tributes to the late Roy Jenkins's reform of the laws on homosexuality and abortion gave the impression that the 1964-70 Labour government was a beacon of tolerance. But Jenkins was more illiberal than the Tories when it came to gambling. He barred eight Americans from Britain in 1967 because of the alleged links between the Mafia and British casinos. The Gaming Act 1968 was motivated by a thinly disguised belief that those links were more real than suspected. It slashed the number of casinos in Britain from roughly 1,000 to about 100. The Sunday Telegraph reported at the time that London casino managers had flown to meet Meyer Lansky and other Mafia bosses in Miami and lament the damage Labour had done to their joint ventures in the West End.

Little changed in the next 30 years. When new Labour came to power in 1997, George Howarth, then a junior Home Office minister, said he was happy to keep the 1968 act as it was. Continued regulation of the sacred market was, however, too much for Howarth's boss, Jack Straw. He put a manic deregulator called Peter Dean in charge of the Gaming Board, and then asked Sir Alan Budd to report on how the gaming laws should be "modernised". Budd was a telling choice. He has dedicated most of his life to impoverishing the working class. As a Treasury civil servant in the 1970s, he was one of the loudest cheerleaders for monetarism. When his theories were implemented, manufacturing industry was devastated and unemployment rose to four million. In an interview in 1990, he admitted to a bad conscience about all the wasted lives. He had a recurrent "nightmare" that many in the Thatcher government "never believed for a moment that [monetarism] was the correct way to bring down inflation. They did however see that this would be a very good way to raise unemployment. And raising unemployment was an extremely desirable way of reducing the strength of the working classes. . . . What was engineered - in Marxist terms - was a crisis of capitalism which re-created the reserve army of labour, and has allowed the capitalist to make high profits ever since."

For all his belated misgivings, guilt has not paralysed Budd. He has found a new way to hit the incomes of the lowly. With the working class back in work, his report suggested that nearly all restraints on the gambling conglomerates be removed.

At present, there must be a 24-hour delay between applying for and receiving membership of a gambling club, for example. It is a slight protection against criminal infiltration of casinos - because clubs demand proof of identity. It also allows a cooling-off period so that novice gamblers cannot walk into casinos on impulse. Budd wanted membership delays scrapped. Anyone over 18 should be able to get into a casino, he said. Once on the gaming floor, nothing should prevent them gambling when drunk: restrictions on the sale of alcohol are an intolerable restraint on trade and must go the way of membership controls, he continued. The dazed losers will be able to run up higher and higher losses because Budd wants the prohibition on casinos accepting credit cards to be lifted as well.

If casinos aren't to your taste, Budd has an alternative. At present, fruit-machine owners must keep jackpots to £10. Budd wants the limit abolished. In future, you may have to get used to watching dead-eyed dupes robotically feeding money into machines as they chase the faint chance of a fortune. (Perhaps they won't be using coins. Sir Alan also wants fruit-machine manufacturers to be free to install slots for credit cards.)

In theory, Jowell is carefully considering the public responses to the white paper that Budd's findings inspired. In truth, her consultation is phony. Most of the changes Budd recommended will require new legislation, which will probably go before parliament in 2004. But there's no doubt what Jowell wants. Where she can deregulate without parliamentary approval, she has already done so. She has agreed to allow the sale of alcohol on gaming floors and rejected the one tightening of the gaming laws even the Thatcherite Budd said was essential. Britain is the only country in Europe that allows children to gamble on fruit machines in cafes and fast-food joints. Budd said there was no excuse for picking the pockets of the young, but Jowell dismissed his concerns. It's a strange nanny who lets her charges waste their pocket money on one-armed bandits, but then these children's parents usually can't afford hired help.

Perhaps Jowell's critics run the risk of seeming nannyish themselves. Everyone likes a flutter, after all, and who but killjoys want to stop a bit of fun? The best response comes from dissenting voices within the gambling industry. They are as worried as the most fervent churchgoers. Brian Lemon is general secretary of the Casino Operators Association, which represents the few clubs that are not under the control of the gambling conglomerates. He said his members were "vehemently against permitting alcohol on the gaming floor". He accused the government and the new, business-friendly Gaming Board of "abrogating their social responsibility". Lady Littler, chairwoman of the Gaming Board from 1992-98, warned Jowell about gambling debts being added to the public's enormous credit-card arrears. "Many individuals and their families are tempted by easy access to credit, cannot manage their finances and juggle between credit cards," she said in a memo to the minister. "Some cards are issued irresponsibly; some have no limits." Jowell has ignored her.

The nannying that most people resent is the excessive duties on alcohol and tobacco. There has been no public demand to make gambling easier because it is already easy enough to gamble. Bookies are everywhere and spread-betting is flourishing. British casinos cash £3.5bn worth of chips a year. According to the Gaming Board, no other capital city in the world has as many casinos as London. The Gaming Act 1968 struck a sensible compromise between prohibition and permissiveness that anyone who wants to tackle the epidemic of theft and murder caused by the prohibition of drugs should look to as a model.

Officially, the act is being discarded because of the growth of internet betting. This does indeed threaten the bookies, but no one in the gaming industry believes that casinos will be hit. Brian Lemon said the government had capitulated before commercial pressure. An investigation of the gambling lobby's tactics, by Audrey Gillan of the Guardian, showed that its members couldn't believe their luck. David Beeton, director general of the British Casino Association, which represents the gambling conglomerates, admitted: "It has come as quite a shock to see how radical the changes might be." Even the government has given up on the pretence that it is protecting a threatened industry from technological change. It now sees gambling as a valuable source of revenue for the Treasury. Jowell seems certain to remove the controls that keep casinos in city centres. Soon they will be everywhere. Northern Labour MPs boast that their ministers will revive Blackpool by allowing Trevor Hemmings, a Channel Islands tax exile, to build Pharaoh's Palace - a £130m casino with 3,000 slot machines. Becoming rich by making others poor is a sunrise industry in the new century.

As ever when this government meets a well-financed vested interest, there's a ripe smell in the air. The big casinos' campaign was led by the Gambling Consultancy Ltd, run by Steve Donoughue, son of Bernard Donoughue, the Labour peer. Donoughue Jr told the Guardian that he had got to know Jowell and Richard Caborn, the sports minister, through his father, whom, incidentally, he keeps on a Gambling Consultancy retainer. Meanwhile, Trevor Hemmings hired Paul Dimoldenberg, a Westminster Labour councillor, to pester ministers. Dimoldenberg is a director of the lobbying firm Good Relations, where he works alongside the former Labour apparatchik Dave Hill, who is married to Hilary Coffman, one of Blair's PRs.

If Jowell and her new friends have their way, there's a fair chance that Britain will end up like Australia. As controls on fruit-machines were lifted Budd-style, the share of Australians' disposable income thrown away on "pokies", as they are called, grew from 1.8 per cent in 1990 to 3.6 per cent in 2000. Australians lose about £5bn each year by gambling, or £350 for every adult - double what the government spends on universities. Church groups have monitored the divorces, bankruptcies and suicides that have followed. But state governments are dependent on gambling taxes - New South Wales gets 10 per cent of its revenue from taxes on pokie players. If they clean up gambling, how will they make up that shortfall?

The British government is almost as addicted to gambling. The long decline in sales of Lottery tickets should be reason for rejoicing. Our fellow citizens are finally realising it's not worth wasting money on a game where the chances of hitting the jackpot are 14 million to one.

To Jowell, however, the sight of the elderly, the tired and the poor spending their money wisely is a calamity. She warned Camelot that if it did not find more effective means to con the public, new Labour would be forced to break with all its principles and nationalise the Lottery.

As for William Wilberforce, the memory of his campaign against governments exploiting the credulous is forgotten everywhere except in his native East Yorkshire. Hull City Council announced last year that his papers and portraits will be housed in a new archive that will honour the region's greatest sons and daughters. The money for the museum will come, inevitably, from the Lottery.

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