Abolition of betting tax fuels boom in gambling

Betting is likely to treble in the decade, creating a financial bonanza for bookmakers, an academic study shows. University researchers say Labour's abolition of betting tax four years ago has provided the perfect conditions for a gambling boom.

Gambling will soar from £6.9bn in 1999 to £11.8bn in 2009, says the Leisure Industries Research Centre of Sheffield Hallam University. In that time, betting on everything from horse-racing to share prices is expected to rise from £1.6bn billion to £4.3bn.

As restrictions on the number of casinos are relaxed, there will be strong rises in spending on fruit machines, poker, blackjack and roulette. The study will also raise concerns about more gambling addicts. Some have appeared in recent court cases, including Graham Price, a financial consultant who stole £10m from clients and a bank to bet on horses.

The Sheffield Hallam team, who analysed figures from official bodies, made a range of predictions about how Britons will spend their leisure time from now until the end of the decade.

They forecast that alcohol consumption will rise and pub groups will experience sharp rises in share price because of the licensing reforms, which came into force last month. They estimate that 15 per cent more spirits will be drunk.

The academics also said the market for sports equipment and participation will grow by 27 per cent between 2004 and 2009 on the back of the 2006 Football World Cup and the 2012 London Olympics.

Spending at cinemas will rise by 3 per cent a year above inflation to £6.8bn by 2009. And the rising popularity of restaurants will continue, with eating out growing faster than inflation. But spending on reading will decline.

The researchers say gambling has been electrified by the abolition of betting tax in 2001 and the rise of internet and spread betting. Before that, gambling had declined by up to 5 per cent a year between 1999 and 2001. After the abolition of duty - in exchange for a tax on the bookmakers' profits - gambling has risen every year. Last year there was a 12 per cent spike.

The second-biggest sector of gambling, gaming machines, including fruit machines inside and outside casinos, is expected to rise by about 50 per cent in the next four years to £3.3bn. Lotteries, the third biggest sector, will nudge up to £2.5bn.

Money gambled in casinos on traditional games such as roulette or poker will increase by 25 per cent to £878m. The number of casinos in Britain has risen from 114 four years ago to 137 this year. There are applications before the Gambling Commission for 39 more casinos.

Under the new regime, the 2005 Gambling Act, ministers will approve at least one super-casino of 5,000square metres, a further eight medium-size casinos and eight smaller casinos by 2010.

Income from bingo is forecast to rise from £570m last year to £679m by 2009. The only the area predicted to decline, the pools, will slump by about a quarter to £62m a year in 2009.

Themis Kokolakakis, principal research fellow at Sheffield Hallam University, said that the abolition of tax was the turning point. "That is the exact moment when the fortunes of the industry changed," he said. The next year William Hill's profits surged from £32m to £170m, a rise of 527 per cent, he said.

The study suggests alcohol consumption will rise by 6 per cent between 2004 and 2009. Wine and beer will show modest growth but spirits' growth will reflect the rise of cocktails and ready-to-drink products.

Experts say 24-hour drinking will increase bingeing and worsen public order. But the Government believes relaxing the old rules will encourage a more sensible, continental-style drinking culture.

Mr Kokolakakis said: "I expect the share prices are going to increase for the alcohol companies. We may see a huge increase over a year for pub groups such as Punch Taverns and Enterprise Inns. They are going to see a lot of dividends from this change. But because they will have greater share valuations and greater profits, they must take some responsibility for some of the social problems."