The ultimate gamble

Encouraged by the government and its friends, Britain is in the grip of a gambling craze fuelled by

The west London branch of Gamblers Anonymous meets at a nondescript community centre in a quiet residential area of Hammersmith. Here, every Wednesday between eight and ten in the evening, the most heart-wrenching, brutal and occasionally uplifting stories can be heard. The losses of high-profile punters such as the golfer John Daly, who this year admitted to gambling away about £32m during his career, and the footballer Wayne Rooney, who lost £700,000 in five months, will always make headlines. But it is at GA meetings, or at Gordon House, or at GamCare - the three organisations in this country that help deal with gambling-related problems - where the spit-and-sawdust reality of gambling addiction can be found.

One man, tall and well built, in his late twenties, with close-cropped hair and a straggly beard, walks to the table at the front of the room and sits down with a sigh. He pauses for a moment, blinking at the bare light bulb before he speaks. "Hi, my name is Andy and I'm a compulsive gambler." Andy has lost two years' worth of savings in two weeks through online betting; in one day he lost £1,000 playing poker online. He'd put a block on his computer at home to try to stop, but wasn't able to block the computer at work. He couldn't help himself (see box, page 31).

The losses, the lies, the mistrust of the medical establishment ("Jesus Christ," says one Hammersmith addict, "I was spending more on my psychoanalyst than I was on my gambling") and the fear of the around-the-clock availability of gambling on the internet are recurring themes. It was the anonymity of internet gaming that helped turn some of the Hammersmith gamblers into addicts; it was anonymity they hoped would cure them now.

One of the few studies on the incidence of gambling in Britain and the only one on the incidence of addiction - the Gambling Prevalence Survey - was commissioned by the addiction helpline GamCare and carried out in 1999. Of those who took part (7,680 adults in total, aged 16 and over), 72 per cent admitted to having gambled within the past year. The incidence of addiction was estimated at between 0.6 per cent and 0.8 per cent of the population - that is, between 275,000 and 370,000 people.

That figure in itself is not startling. Australia, for example, where gambling is seen as part of the national psyche ("What other country would have a national holiday for a horse race?" asked one of the Hammersmith addicts, an Australian), leads the world in gambling addiction, estimated at roughly 2.3 per cent of the population. This is the spectre, however, that now haunts many anti-gambling organisations in Britain, in the wake of the government's liberalisation of the gambling industry following the Gambling Act 2005. We shall have to wait for the results of the survey being conducted by the newly formed regulatory body, the Gambling Commission, to find out whether the rate of addiction is on the rise, but it would be startling if it were not so. This is because gambling itself is undoubtedly on the increase. Obviously, not every gambler becomes an addict. But Adrian Scarfe, the chief clinician at GamCare, says simply: "Where there is more gambling, there are more addicts."

The high point of gambling in Britain is considered to be a period of aristocratic excess in the late 18th and early 19th centuries. Upper-class gaming was characterised by "deep play" (defined by the philosopher Jeremy Bentham as gambling for stakes so high that it becomes irrational) and crazy, eccentric wagers, such as the one apparently struck by the northern baron who bet he could make it to Lapland and back within an allotted time, accompanied by two reindeer and two native females. He won his bet.

Gambling in the early 21st century is far more democratic. Women are increasingly drawn to internet gambling, and the National Lottery cuts across all classes. It is also markedly less eccentric. But all the evidence, statistical and anecdotal, suggests that we are in the middle of a gambling craze fit to rank alongside any in our history, the consequences of which have yet to make themselves clear.

Last year, according to the National Audit Office, Britain spent about £53bn on gambling - roughly a 20 per cent increase on the figure of seven years before. That is total turnover as opposed to yield (stake minus winnings), but it gives a good idea of the increase in gambling activity in general. The turnover of the high-street bookmakers Ladbrokes and William Hill increased 110 per cent and 219 per cent respectively between 2002 and 2005, and Ladbrokes now has two million registered users in 200 countries wagering more than one million bets a day. Britain truly is the epicentre of bookmaking, and the World Cup this summer has been the biggest betting event in sporting history, with British bookmakers taking £1bn in bets.

What is the explanation for this explosion? The most obvious reason is the reintroduction of the National Lottery in 1994, in the immediate aftermath of which more than two- thirds of the adult population enjoyed a regular weekly flutter. Despite the Lottery being one of the purest forms of gambling, the government attempted to market it as a bit of fun that would contribute to five good causes: charities, the arts, sport, national heritage and the Millennium Fund. Slogans such as "You play, the nation wins" were oddly reminiscent of the patriotic backdrop to the first ever English lottery in 1569.

While the rest of the gambling industry was under the auspices of the Home Office, the National Lottery was the responsibility of the Department for Culture, Media and Sport (DCMS) - David Mellor's "Ministry of Fun" - and while the gambling industry was regulated by the Gaming Board, the National Lottery had its own regulator. Thus, from the start, the attempt was made to remove the Lottery, in the public perception, from gambling proper.

The effect was to destigmatise gambling. Through the regular Saturday-evening slots on the television, gambling was brought straight into the living rooms of millions of middle-class viewers for whom gambling had been traditionally a repellent idea. The marketing strategy clearly worked: in a DCMS survey conducted in 2004, the Lottery (along with bingo) was the only gambling activity that was viewed favourably. (By contrast, fruit machines, casinos, betting exchanges and internet gambling were viewed very unfavourably.) And in 2005/2006, Camelot posted a remarkable set of figures, increasing the value of ticket sales by £246m and proving that the Lottery is as popular as ever.

The second, less obvious, effect of the Lottery was further to liberalise the gambling industry. From the outset the National Lottery had certain advantages over other parts of the industry: its ability to advertise aggressively on television, for example. Soon enough the demand rose for a level playing field, and a government that was in the business of peddling gambling itself could scarcely resist such pressure. So, for example, pools companies were allowed to reduce their age restrictions from 18 to 16; betting shops were allowed to stay open later in the evening; casino hours were extended and applications for membership could now be made by post. In themselves, these and other developments were small, but they added up to an industry which, post-1994, was far more liberally regulated than before. The endgame of this process, 11 years later, was the first major revamping of gambling legislation for nearly half a century - legislation that unfettered the gambling industry even further.

This gambling explosion is also fuelled by the round-the-clock availability of gambling through the internet. Christian sen Capital Advisors estimates that the worldwide revenue (yield) from gambling online is $12bn, and that, it says, will double over the next five years. There are more than 2,000 gambling websites, offering everything from sports betting to poker and casino games. PokerPulse.com is dedicated to tracking the volume of online poker, and in May last year it estimated that more than 1.8 million people played real-money poker on more than 375 dedicated poker websites. No wonder many of the newcomers to the Sunday Times Rich List were internet poker entrepreneurs, such as the founders of Party Gaming, Anurag Dikshit (wealth estimated at £1.7bn), Ruth Parasol and Russ DeLeon (combined wealth £2.01 bn).

It is this growth of "remote" gambling that really worries Adrian Scarfe. Calls to GamCare increased by 41 per cent in 2004-2005. "Our evidence is only anecdotal, but my impression is that it is a growing problem because of the increasingly complex nature of gambling. Originally people would ring up and say that they had a problem with one thing - dogs, horses, fruit machines, whatever. Now we find that things are much more interchangeable. I have a client who bets at the bookies in between business meetings, at the casino in the evening and then on the internet when he gets home at night.

"The internet is a huge risk area. It is a perfect medium for gamblers. They want instant gratification and around-the-clock availability; they are risk-takers and therefore likely to try out new technology; and they like secrecy and anonymity. You use virtual money rather than ready cash, so people bet larger sums. It's beautiful for chasing losses. Online poker and betting exchanges are the biggest long-term problems that we face. The next thing will be gambling on mobile phones and all of a sudden you have gambling on the move."

The cornerstone of the Betting and Gaming Act 1960 was that gambling, though legal, should not be stimulated. If we accept that the early 21st century is witness to another upsurge in gambling, it is surprising that the most recent legislative response, enshrined in the Gambling Act 2005, is to abolish that principle. For while few could argue that the law needed updating - after all, the Betting and Gaming Act was framed well before Microsoft was a twinkle in Bill Gates's eye - there has been no public clamour for greater liberalisation.

The 2004 DCMS survey found that most of the respondents thought the regulation was "about right", that a sig nificant number felt that there ought to be tighter controls in place (especially where fruit machines and the internet were concerned) and less than 5 per cent argued for greater liberalisation. Only 2 per cent felt there should be fewer restrictions on the casino industry. Yet that is the most noteworthy, and newsworthy, part of the new legislation.

The Secretary of State for Culture, Media and Sport, Tessa Jowell, made her position clear in her department's white paper A Safe Bet for Success, in 2002. "Laws were enacted," she said, "in an era when gambling was regarded as an activity which was at best morally questionable . . . Since that framework was put in place the social climate has changed. Almost three-quarters of the adult population participate in gambling in one form or another. It has become part of the mainstream leisure industry." And so, "there is a powerful case for lifting the regulatory borders on an industry that has built a worldwide reputation for integrity. We will abolish the legal requirement that bookmakers, casinos and bingo operators must demonstrate unmet local demand for their product."

Ultimately, some of the proposals of the Gambling Bill were watered down in order to hurry it through parliament prior to last year's general election. Instead of Las Vegas-style casinos swamping the country, there will be just one municipal council chosen from a shortlist of eight sites. Blackpool and Greenwich (what a fitting end to the Millennium Dome fiasco that would be) remain favourites to win the "jackpot". Should the guinea-pig project be a success, few people doubt that more super-casinos will follow.

Even here, the theory behind super-casinos - that they will lead to extensive urban regeneration - could well be false. The closest analogy to Blackpool is across the pond in Atlantic City. Like Blackpool, it was a decaying seaside resort that turned to gambling as its way out of the trough. Gambling was legalised in Atlantic City in 1978 when the Casino Control Act announced that gambling was a "unique tool for urban redevelopment". Thousands of jobs were created, and millions of dollars invested, but if anything urban decay continued apace. Homelessness increased, as did crime; unemployment remained high and rampant land speculation led to soaring property prices. A decade later, the New Jersey Governor's Advisory Commission on Gambling was certain that "rental businesses and rental employment have continued to decline despite the presence of gambling". It is not surprising that super-casinos are bad neighbours for ordinary businesses: after all, the whole point of a Las Vegas-style super-casino is to make sure that every amenity imaginable is available to the punter, so that once ensnared in the environs of the casino there is no escape.

The impetus for the new legislation has come not from the public but, for obvious reasons, from the gambling industry and from a government keen to promote Britain's potential position as a leader of online gaming. Why else would the responsibility for gambling be moved from a department that regulates (the Home Office) to a department that exploits (the DCMS)? With the US making increasingly bearish noises about the legalisation of online gambling, the British government is keen to establish this country as the market leader for the world's fastest-growing and most lucrative market. By giving online companies the thumbs-up, Britain is hoping to lure many offshore internet gambling businesses back onshore, taxation being for them a small price to pay for the seal of approval. Revenues for PartyGaming alone were $978m last year, with profits of $325m. It is a decent-sized catch that the Chancellor is fishing for.

As the cycle of political allegiance shifts to the right, as it inevitably will, new Labour will be left with a ledger of its achievements and failures. One of those "achievements" will be the transformation of Britain into the gambling hub of the world. Is that really what Tony Blair wants his government to be remembered for?

Mike Atherton's "Gambling: a story of triumph and disaster" will be published by Hodder & Stoughton in September

Gambling by numbers

$24bn
Projected value of the global online gambling market by 2010

£25,000
Average online gaming debt in the UK

41%
Increase in the number of people using the gambling charity GamCare in 2004-2005

27
Number of local authorities that applied to host Britain's first super-casino

1,250
Number of slot machines with unlimited jackpots that will be allowed in the super-casino

£33bn
Increase in UK sports betting in the past five years

Research by Daniel Trilling

Gambling’s nouveaux riches

Dianne Thompson
£526,000 pa, plus bonuses
Chief executive of the National Lottery operator Camelot (annual turnover: £4.9bn). For every £1 ticket, 50p goes to winners, 28p goes to good causes, and 0.5p is Camelot's profit.

Ruth Parasol
$1.8bn
Former internet porn princess who bankrolled PartyGaming.com. Online gambling is illegal in the US, but most customers are American. Revenues rose 1,900 per cent in two years.

Next up: Philip Anschutz?
$5bn
American billionaire and new friend of John Prescott. Made his fortune in oil, rail, telecoms and cinemas. Hopes to turn the Dome, which he owns, into Britain's first super-casino.

Andy's story

Andy attends the west London branch of Gamblers Anonymous. The assembled group, 14 men and one woman, sit in a semicircle in front of him.

"I've had a couple of horrific months recently. I've been coming to these meetings for nearly ten years now, and up until two months ago I had not gambled for five years. I felt strong, I didn't have the urge.

"Four months ago I changed jobs, and I overheard two fellas going on and on about an unbeatable system they have on Betfair. I knew it was bullshit and I kept telling myself it was bullshit. But in the end I tried it. In the past two weeks I've lost two years' worth of savings. I'd put a block on my computer at home, but at work I can't, and I haven't been able to help myself.

"I've been chasing my tail for two weeks now, getting in deeper and deeper and deeper. I've taken out five loans this week alone. Yesterday was just heinous. I sat at the computer all day and lost £1,000. I was playing poker online - and I don't even know how to play poker. Other guys must just have creamed me off. At the end of it all I was so angry.

"I've been living a lie these past two weeks. Last night, I told my girlfriend. It was like she'd been hit by a train. I felt so humiliated. I've been trying to think of the positives. I'm going to throw myself back into the meetings. I've been happy for five years, but now I'm as low as I have been for ten. But I know that if I keep coming to meetings I can get my life back on track."

New Labour's gambling addiction
Nick Cohen
www.nickcohen.net

If you want to understand why a Labour Party that once "owed more to Methodism than Marxism" has let gambling rip, you need to look at how the greed and fear inspired by Nineties free-market ideology preyed on the minds of politicians and civil servants.

No time feels as remote as the day before yesterday, and it is easy to forget the libertarian fervour that followed the collapse of communism and the growth of the internet. Capitalism was on the march. Regulation was pointless. Resistance futile. John Perry Barlow, a techno-utopian, boomed in his 1996 "Declaration of the Independence of Cyberspace": "Governments of the industrial world . . . on behalf of the future, I ask you of the past to leave us alone . . . You have no sovereignty where we gather . . . You have no moral right to rule us nor . . . any methods of enforcement we have true reason to fear." Like a mark lapping up a conman's patter, new Labour fell for it. Online betting would tempt regular punters and millions who had never been serious gamblers before, it reasoned. They would throw money at bookmakers based in offshore havens that were beyond the reach of the British regulatory authorities, and, more pertinently, the British tax authorities. Think of all that money disappearing without a penny of tax being paid. Think how many British bookmakers who did pay tax would fold. Why not accept that it was impossible to license, tax or regulate the internet, and fight back by turning Britain's inner cities into mini versions of Las Vegas?

The logic appeared impeccable, but it rested on the dotcom bubble's false assumption that governments were powerless. The citizens of China and Iran now know that their governments can determine what they can and can't read on the net. And there's a good chance that Americans will soon learn that their government can decide if they can gamble online. A bill before the US Congress would prevent gamblers from using credit cards to bet via the internet and block access to gambling websites. It is a bit of a dog's dinner, but the basic principle makes sense: free markets are not as free as their adherents believe. They need to be protected by laws enacted by governments.

There is no hint that the British government will follow suit. As Mike Atherton says, there are probably about 370,000 British gambling addicts. The deregulation of casinos will probably double that. A Labour government is quite cold-bloodedly prepared to allow sharks in suits to ruin all these people and their families because it can't think its way out of a discredited ideology.