A gamble that paid off: Fifty years on betting shops are glossy recession-busting businesses

This may seem like an act of lèse-majesté in the context of today's big event but this Sunday, 1 May, will also be worth celebrating for historic and social reasons as it marks the 50th anniversary of the opening of legalised betting shops. There may not be too many street parties in honour of this anniversary, but there will be a quiet moment of reflection for those who remember the frustrating decades when the simple act of getting a bet on was obstructed by politician and priest alike.

Harold Macmillan's late-1950s Government, by way of Home Secretary Rab Butler, introduced the Betting & Gaming Act in 1960, partly as libertarian measure but also to try and end illegal bookmaking which had grown enormously throughout the decade, underpinning severe criminality in some cases. The Churches Council on Gambling "reluctantly acquiesced" to support the Act but sought to ban advertising in the shops and limit their hours. If betting shops were to be legalised there would have to be a "dead window", blacked-out or curtained-off, to avoid corrupting the passing public.

Butler wrote an open letter on the front page of The Sporting Life on 1 May 1961, imploring the bookies to accept the opportunity to move off the streets. He later reflected that the government "was so intent on making betting shops as sad as possible, in order not to deprave the young, that they ended up more like undertakers' premises". The Government's hope was that gamblers and bookies alike would embrace legality. It was huge risk.

The postwar industrial recovery of the 1950s had been matched by booms years for racing and football, with huge attendances made up working men on a day out – usually a half-day, to be precise, for it was common practice for Saturday mornings to be a valuable source of overtime, and if you see film footage of sporting crowds of the period a majority of spectators are wearing a collar and tie because they have come on from factory, workshop, office or retail premises.

There were plenty of racecourses accessible to the urban punter in the 1950s to serve such clamour – Manchester, Birmingham, Stockton and Alexandra Park in north London, all now closed unfortunately. So the paradox for ordinary punters of being able to bet when they went to the races, but not when they were at work or at home – the only way you could bet off-course was via a credit account using a telephone, two distant possibilities for the working man – was resolved by recourse to illegal "street betting".

Most of the on-course bookmakers had "runners" collecting bets from pubs but there were also armies of illegal bookies with contacts inside factories who serviced the punters trapped in their working premises. Mancunian Fred Done now manages one of Britain's biggest bookmaking firms under the no-nonsense trading name of Betfred, which owns the exclusive franchise at Wembley Stadium. He started helping his dad take bets aged 15 in 1959 from "a backyard, covered with a tarpaulin. Dad also had dozens of runners inside the Trafford Park industrial estate, and he used to send a taxi round collecting bags of bets."

I have sufficient evidence to believe that my own father did much the same. He worked in the English Electric factory on the East Lancashire Road in Liverpool, home to around 15,000 employees in the 1950s. I have a childhood memory, still strong, of going out with him one early summer evening in the family's Ford Popular. He drove to the Bow and Arrow pub in West Derby and asked me to wait for a moment before taking a brown paper bag into the pub. While I waited a couple of cars pulled up and men in suits stormed into the pub. Moments later several dozen blokes could be seen jumping out of the windows and fire exits of the pub and, in Scouse parlance, "legging it", my dad included.

He never told me what happened that night but other elements suggest he was a on a delivery of betting money from the factory to a bookie in the pub when the authorities intervened. Such as the fact that every summer holiday involved a visit to a racecourse, one of the photos of me as a toddler shows me in the racecourse carpark at Newton Abbot in August 1954; then there was the Isle of Man incident of 1960, in which my dad, my Uncle Dick and me fled across gardens along with other men as police appeared in an alley to stop a man taking bets from the toilet window of his house; and finally, when one of his best friends left the factory to set up a small chain of betting shops, my dad did Saturday and Bank Holiday shifts for him as a "settler", the backroom man who calculated the winnings for lucky punters. My mother used to joke that it was "voluntary work".

Bizarrely, when the grocery shop across the alley from our house closed and an application was made for a betting shop licence, my dad opposed it vigorously, possibly on the grounds that he knew what the clients might be like. This transition from illegal to legal had obvious challenges. The street bookies had made piles of money and might be reluctant to go straight and pay salaries and tax. And punters might not suddenly switch their betting habits, with some undoubtedly enjoying the furtive nature of their activity. Nevertheless, most of the street bookies and many of the regular firms were quick to embrace the Act and set up premises, with only William Hill, one of the major powers in racecourse bookmaking, backing away in caution.

The standard interior design of the betting shop was a counter with a wire grille behind which sat the "clerk"; a blackboard on which the day's meetings, races, prices and results would be chalked up by a "board-man"; and a "blower", a speaker high up on the wall through which a staccato race commentary would be delivered by a reporter at the track. It is rumoured that the late Queen Mother had a blower installed at Clarence House, so that she could follow the races, some of which involved her own horses.

As unattractive and functional as they were, betting shops proved an almost instant success with close to 10,000 premises opening within the first 18 months. John McCririck, Channel 4's Old Harrovian betting correspondent recalls the excitement of the first day of trading. "I climbed the rickety wooden stairs to Jack Swift's first-floor betting office in Dover Street, off Piccadilly and this tiny emporium was glorious bedlam, packed out with punters shouting their horses home. The place was filled with cigarette smoke but that day a breeze of fresh air wafted into the lives of British punters." John Banks, one of the big Scottish bookies declared them to be a "licence to print money" and embraced them with a sheepskin hug. Many bookmakers preferred to style themselves "Turf Accountants" as a nod to new-found gentility.

There was inevitable opposition from religious groups and social conservatives, but in retrospect the Act that brought the betting shop into existence can be seen as a companion to later 1960s legislation that reduced censorship on books, films and theatre, allowing the public to be treated as adults rather than potential deviants. Labour MP Woodrow Wyatt, later to become Lord Wyatt, and Chairman of the Tote, wrote loftily of the new spirit of the age.

"Betting, particularly on racehorses, is a great force for good. For millions, placing a bet is the only democratic decision that they make regularly on their own responsibility. In the factory or the office their routine tasks are allotted to them to be performed with little personal initiative or discretion. Dehumanising fetters the mind and lowers the spirits of the average wage-earner. Placing a bet restores his independence and stimulates his brain."

As a youthful punter, I'd already experienced the endorphin release generated by finding winning bets – a tanner (2.5p) on the grey Nicolaus Silver (at 28-1) to win the 1961 Grand National; five shillings (25p) on Selvedge at 7-1 at Chester for my first on-course winning bet, all placed through my dad of course. On occasions I waited for him outside the betting shop in Derby Lane, Old Swan, the door open but the interior concealed by a bead curtain. The scent of strong cigarettes drifted out, as did the crackle of commentaries, the shouts of expectant punters, the curses of the losers. I sensed a version of Narnia in there but I was too young to get into the wardrobe. But once December 1969 passed, I was free to enter.

Appropriately, Mecca Bookmakers were the source of my pilgrimage, having found premises in a shop close, but not adjacent, to our house, flanked by a hair-dressing salon and a chemists. There was little magic inside, apart from the corporate colour scheme and miniature Biros for use with the betting slips. The board was plastic with runners and riders sheets held on by magnetic strips. But there were still no pictures from the racecourses, so I found myself, a man at last, standing with others staring upwards at the blower, trying to picture the race being described, halfway to paradise.

Throughout the 1970s the betting shop boom continued, with Cyril Stein of Ladbrokes driving his company forward in terms of acquisition and promotion. With William Hill, the late starters, Mecca and Coral, a so-called Big Four dominated the market and made untold millions from the public's appetite for betting. It was partly kindled by the exploits of Lester Piggott, nicknamed "the punters' pal" for his prolific wins, and by the likes of the "ITV 7" a multiple bet featuring the races televised on World of Sport. Meanwhile, the BBC pumped Royal Ascot, the Grand National and the Cheltenham Festival into living rooms now equipped with colour televisions.

The push for televising racing in betting shops finally succeeded in 1986 and breathed new life into the market, with smaller independent chains getting in on the business, providing further initiatives such as credit and telephone accounts. With the Treasury enjoying windfalls in betting tax the reform process continued apace, allowing shops to open up their windows and advertise bets. They could also serve hot drinks, stay open longer and, later, service Sunday racing.

By the mid-1990s betting shops had become smarter and more welcoming, with an abundance of information screens and comfortable seating to encourage patrons to treat the shops like their own living rooms. The transfer of betting tax from the individual punter to the bookmakers' profits – made as a concession to several big firms going "offshore" – brought in even more customers. William Hill went public on the Stock Exchange, providing a pretty sure bet on their shares too.

Over the past decade however, the betting landscape has changed dramatically with the growth of betting exchanges, where punters can "back" or "lay" with other punters. Online gaming – bingo, poker, blackjack – is flourishing while betting directly on book-makers' websites is certainly the fastest way to "get on". Indeed there is a generation of younger punters who have never been inside a betting shop and simply conduct their business by computer or mobile phone. Newish boys, such as Irish firm Paddy Power, make about 50 per cent of their multimillion pound profits from online betting but their shop business is holding up well.

One bookmaker, the Millfield educated Victor Chandler, sold his 41 betting shops in 2006 in order to concentrate on the worldwide passion for on-line gaming. He has kept open a luxury betting lounge in Mayfair – air-conditioning, leather sofas, designer snacks – for his high-roller clients and one in Dublin, but clearly sees a tax-haven base and cyberspace betting as the future. With the Tote, the government-owned pool-betting operation, soon to be sold off, there may be further changes in a once-constant ecology.

Graham Sharpe, the public face of William Hill, still sees a bright future for the betting shop, "the staple diet of the punters" as he calls them and having started out as a board-man he retains great affection for them. "They are more comfortable and better-equipped than ever and the two things you can't get online are the personal touch and being paid out in cash."

When I travel I always try to find a betting shop – a TAB in Melbourne; a PMU in Bordeaux; a shop under Penn St Station, New York – in the way people might look for a museum. But I now have split loyalties. I have a telephone/ online account with the "nanny" (goat/ Tote) and can bet around the clock. And if I win I can transfer the money to my bank account with a few keystrokes of my laptop. But it's a solitary business.

So I also go to the Backhouse shop in town. It's modern, smart and you can talk to the staff on first-name terms. You can also moan and shrug with other suffering punters. And if you win, the banknotes come with a smile and a genuine "well done". So keep that bunting up for a few more days. Happy 50th birthday betting shops!