The last spin of the wheel - Tuesday 12th of April 2005

The future of the gambling bill will be decided this week - and Michael Howard may hold all the chips, writes Nick Mathiason

It is the ultimate game of roulette. With a jackpot worth tens of billions of pounds, the government and Britain's casino industry are locked in a fraught contest neither side can afford to lose.

But in a departure from the normal rules, it is Conservative leader Michael Howard who this weekend controls the wheel of fortune. Howard has the power to scupper what is one of Labour's most controversial proposals while at the same time painting himself as preventing a gambling epidemic. The question is will he use it? In the next four days, we'll find out.

After five years of government consultation, positioning papers, intense negotiation, lobbying and ferocious media campaigning, the controversial Gambling Bill, which has seen more U-turns than a London black cab, is on a knife edge. The Bill is supposed to modernise 38-year-old gambling laws, protect punters, legislate for the internet age and create a new regulatory framework. Casino bosses saw the bill as a once-in-a-generation opportunity to tempt millions through their doors and build dozens more gambling dens stuffed with cash-guzzling slot machines.

With parliament set to be dissolved on Thursday, no one knows for sure whether the bill will be axed or spared.

The issue has enormous repercussions. Share prices of gambling firms could rocket or plummet on the outcome. The regulatory environment a powerful leisure industry with enormous social implications is being carved out for the next decade.

As the clock ticks away, British casino bosses are desperately trying to win new concessions. At the heart of the matter is a feeling that they are treated unfairly. The 24 new casinos of varying sizes proposed by Culture Secretary Tessa Jowell will all have many more slot machines than the 140 existing ones. But proponents of the legislation - and there are many - say there is ample scope for casinos to increase their customer base much more, and that currently a handful of companies exert a stranglehold on an industry ripe for new competition.

With Jowell determined not to budge from her self-proclaimed 'precautionary' stance after a media onslaught forced her into a humiliating climbdown on casino numbers last year, there is now precious little 'wriggle room'.

Behind the scenes, the industry and government officials are racing to have a final agreement to set before Jowell tomorrow morning, when she plans to visit Blackpool. As she travels north, a statement will be made in her name in parliament outlining what will be the final position - in effect, take it or leave it.

If the casino industry fails to win what it wants - more slot machines with bigger jackpots and the right to open betting shops in their establishments - it will withdraw its support from the gambling bill. This will encourage Howard to block it.

Although the Tories and the casino industry are traditional bedfellows, Howard has a much bigger gallery to play to. The temptation to make a direct hit on what is an enormously unpopular bill appears irresistible. So on Tuesday he will demand that the Government cut by half its proposed eight super casinos, which will contain thousands of slot machines and unlimited jackpots.

While the Conservatives are in favour of large parts of the bill such as the creation of a Gambling Commission and the regulation of internet gambling, they believe the social effects of supercasinos are unproven and that eight is too many. In addition Howard will demand that casino punters be required to produce identity to enter new gaming dens. The move in effect plants a bomb under the legislation.

'This is business clashing with politics at its most brutal,' said one casino industry insider this weekend. 'I'm feeling ter ribly uncomfortable. I'm not sure where my business is going to be. '

Howard could bring to an end one of the most tortuous legislative episodes seen under Labour. The history of the Gambling Bill is a testament to hype, hope and greed.

In 2003 the casino industry was the best performing sector in a plummeting stock market. What underpinned its stellar performance was the tangible belief that the government would create lucrative growth opportunities with new legislation - the first for 38 years.

And they weren't shy about spreading the word to fund managers, who piled into firms like Rank and Stanley Leisure. The industry sensed that a new Gambling Bill would create a brave new gambling world with 24-hour licences, no membership restrictions and live entertainment.

But that was just the icing on the cake. What excited the city and casino bosses was the real possibility - fanned by authoritative Labour policy papers - that the floodgates would open and dozens of new casinos up and down the country would be built, and existing casinos would be expanded. The hope was that these casinos could install new slot machines with significantly increased prizes - and draw in millions of punters.

But this was not all: casinos thought they would soon be permitted to advertise and offer a whole panoply of gambling products that until now were outlawed in their premises. These included sports betting and bingo.

'If you said five years ago that the existing industry would get 24- hour licences, the right to advertise and have punters walking in off the street without any membership restrictions, they would have bitten your hand off,' said one insider. 'But expectations were ratcheted up and this has now caused tension between government and industry.'

As casino bosses excitedly told fund managers that their industry had a real growth story - which fed through to companies' share prices - and massive American casino firms told journalists they were prepared to invest billions of pounds in building large numbers of mega casinos, church groups became increasingly alarmed that the country was sleepwalking into a gambling nightmare of addiction and social problems.

Opposition to the Gambling Bill - five years in the making - was muted until last summer. Then the dam broke. An unprecedented alliance between the Guardian and the Daily Mail exposed government links to the casino industry and the papers published stories detailing the huge amounts of money spent by gambling bosses on Whitehall lobbyists.

Jowell was forced to dramatically tone down the bill. The subsequent delay means it could run out of time.

All parties agree that the current gambling laws, 38 years old, desperately need revising. The explosion of internet gambling and powerful new electronic gambling machines needs to be regulated. The alternative is in any case spiralling social problems. But the bill has become a political football. It may well be about to be kicked into the long grass.

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