Cashing in at the UK casino

Politicians are forever peddling our sceptred isles as a haven of business excellence. For once, they have hit on a cause where rhetoric is about to be matched by reality – gambling.

In a little perused paragraph of his pre-Budget statement, Chancellor Gordon Brown let it be known that there was “scope” for “giving punters a better deal”. Although he was characteristically circumspect in his choice of words, they are generally taken to mean he will abolish, or at least considerably alleviate, the 6.75 per cent tax currently levied on punters’ betting slips.

What he evidently had in mind was safeguarding future Treasury revenues from the depredations of online-enabled offshore betting companies, which owe no fiscal allegiance to HMG whatsoever. The plan is probably to shift the burden of taxation onto the bookies themselves and, perversely, they are delighted. Why? Because they know, thanks to experience of a similar reform in Ireland, that lowered betting tax leads to an explosion of gambling activity.

As it happens, there is little visible evidence of Internet betting making much of an inroad into the UK, yet. More significant is the fact that Brown’s proposals coincide with the evolution of a more lenient, lighter touch, attitude towards gambling in the UK. Next summer, for example, the Home Office is due to publicise the findings of an investigation into gambling, headed by former Downing Street economics adviser Sir Alan Budd. Few expect him to recommend anything other than deregulation; the question is, how much?

Both industry and government are well aware that a careful balancing act needs to be performed. On the one hand, there is no doubting that social attitudes towards gambling have changed radically in the past decade. Gone is the stern, reproving Victorian morality which ensured legislators kept gambling well within check. In its place we have a Lottery-loving society, where over 20 million of us regularly like to have a flutter; where leisure spending is rising to unprecedented levels; and new technology is greatly increasing access to gambling. If the UK industry fails to exploit this opportunity, it risks being buried by foreign competition. Indeed, there are already omens of this, in the UK advent not only of offshore gambling companies, but Paddy Power – which in 12 years has built up a 30 per cent share of Ireland’s I&£600m market from scratch.

But on the other hand, there is the need to guard against the Las Vegas Effect. Unbridled gambling also leads to unbridled social problems, such as addiction.

Sooner or later, as betting deregulation in Australia clearly indicates, that can lead to a consumer backlash. And no industry profits from that.

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