Perhaps a Merlot

Ross McKibbin

  • Regulating Commercial Gambling: Past, Present and Future by David Miers
    Oxford, 588 pp, £70.00, September 2004, ISBN 0 19 825672 8

Hardly any aspect of British life has combined religion, class, ideology, politics and law more potently than attitudes to gambling – not even attitudes to drink and sex. That is because, as with drink and sex, two strong impulses have contended. On the one hand, the majority of British people have always liked to gamble; on the other, a smaller number, who have had privileged access to political elites, have sought to stop gambling – usually on a priori moral grounds. Those who dislike gambling have normally felt more strongly than those who like it; their passion has made up for their paucity of numbers. The state has tried to please both majority and minority and typically has pleased neither. It has passed much prohibitory legislation – conspicuously the Street Betting Act of 1906, which attempted to ban off-course betting on horses – but has been very reluctant to enforce it, particularly if, as in the case of the Street Betting Act, legislation seemed to favour the non-working class against the working class. One result of this tension is that the whole apparatus of modern mass gambling largely originated in an activity – street betting – which was until 1961 formally illegal.

In the contemporary Labour Party, too, strong puritanical and authoritarian impulses jostle with (rather weaker) libertarian ones. While there is a conviction that everyone should be fingerprinted, photographed, numbered and generally pushed around, there is also a feeling that people should enjoy themselves without the state interfering. More relaxed pub opening hours are one manifestation of this. The gambling bill recently introduced by the culture secretary, Tessa Jowell, is another. The bill, though likely to be passed in some form, has run into fire – more, certainly, than the government expected. It is thus an opportune moment for David Miers to publish Regulating Commercial Gambling, a legal history of how we got where we are. Miers and his colleague David Dixon are probably the two leading authorities on the legal history of British gambling, and this is an impressive book, marred only by poor indexing, the most surprising example of which is the confusion of W.E. Gladstone with his son Herbert. The book covers a long span – from the 17th century to April 2004 – and is based on a remarkable array of sources. Every form of commercial gambling is covered: cards, horses, dogs, football pools, lotteries, gaming machines, casinos. It has a technical command which can be daunting, but is indispensable to anyone who wishes to understand why a gambling bill can still be controversial, or at least difficult to frame. (The Home Office and the Department of Culture should each buy copies.) More important, for anyone interested in the problems of the new bill or of the equally problematic National Lottery, Regulating Commercial Gambling has a lengthy discussion of both the character and significance of the lottery and of the Gambling Review Report, on whose recommendations the present bill is based.

Several lessons can be drawn from Miers’s account. The first is the sheer pointlessness of, and the waste of intellectual and political energy involved in, the attempt to devise prohibitory legislation that covers all cases, is proof against the ingenuity of the gambling lobby and its lawyers, and that the police are actually willing to enforce. All prohibitory legislation has hitherto represented the triumph of hope over experience, something instinctively recognised by the Home Office, which has always had, as Miers notes, ‘an institutional preference for letting sleeping dogs lie’. Indeed, its foot-dragging is a constant theme in this story. The second lesson is that the decision to move from prohibitory legislation to regulation – a consequence of the obvious failure of prohibition – has been to legitimise commercial gambling as a business. The state now approaches it as it does any other legitimate industry. The Gambling Review Report, which specifically declared itself morally neutral, therefore differs fundamentally, Miers rightly argues, from all previous inquiries and legislation. Even the 1949 Royal Commission, which came as close to moral neutrality as was then possible, tended to regard gambling as a difficulty (though a relatively harmless one) whose only real value lay in the taxation which might be levied on it, and it was a decade before its recommendations – principally the legalisation of off-course betting – took form in the 1960 Betting and Gaming Act. But that act, while conceding that people should be able to bet legally at a convenient betting shop, required those shops to look so sordid as to deter any but the most hardened better. The result was that it became difficult to distinguish a betting shop from a dirty book shop, and that remained the case until the 1980s, when all-party legislation promoted by Ian Gilmour permitted their owners to make the shops look more or less civilised. That legislation, and the establishment of the ‘good causes’ National Lottery in 1993, anticipated the moral neutrality of the Gambling Review Report.

Moral neutrality, of course, does not imply a carte blanche. Even a legitimate industry requires regulation, and the regulation of gambling has become increasingly complicated. Because of the traditional reluctance of the state to think of gambling as an industry – which would imply moral neutrality – regulation has also become increasingly ad hoc: this is one reason the Gambling Review Report recommends the establishment of a gaming commission to regulate all types of commercial gambling. Nevertheless, although the government’s morally neutral draft bill is a real advance on previous legislation, gambling can never be politically or ideologically neutral. It touches so much of our social and economic life that there will always be either an implicit or explicit political economy of gambling. It is here that the draft bill is deficient. Little real thought seems to have been given to the criteria a social-democratic government should meet in preparing legislation on gambling.

The government is right to drop a morality or socialist ‘test’ of gambling, although one does exist. Gambling arguably distributes rewards randomly and winnings usually have no relation to individual effort or worth. It defies both rationality and fairness. But the satisfactions people find in gambling outweigh any doubts they might have as to its fairness. Gambling is enjoyable: it creates in humans the same physiological pleasure as dancing or sport, with the added excitement of risk. The criticism frequently made of the draft bill – that it is creating demand where none exists – is almost certainly wrong. There is a demand for gambling, and evidence suggests that people will gamble on different kinds of odds and at different levels of risk: they will bet on horses and will gamble on lotteries, even if the chances of winning the highest prizes in the National Lottery are negligible. The government is also right to ignore (if rather defensively) the argument that the new bill will encourage ‘addiction’. The British, though happy gamblers, are not especially heavy gamblers. ‘Addiction’ rates, so far as we can tell, are low, much lower than rates of addiction to alcohol or tobacco. This might change as the instruments of gambling multiply, but the evidence from Australia suggests that though money spent on gambling does increase as the instruments multiply, it is usually only in line with rises in disposable income. In Britain, the introduction of the National Lottery brought about not so much more betting as transferred betting, especially from the football pools. The opponents of gambling have always overstated its harmful effects. The ruin of the gambler, his family and the nation have been foretold so often it is surprising anyone still bothers to make the effort. Unfortunately, in a society which has persistently exaggerated the dangers of gambling and underestimated its pleasures, this is an argument easily made.

Opponents of gambling have also exaggerated the extent to which there has been a moral consensus as to its evils. There never was such a consensus, and that made the enforcement of prohibitory legislation very difficult. The police would react to pressure, but frequently took the view that they had better things to do, while some were prepared to look the other way for a consideration. More than anything else the 1906 Street Betting Act was responsible for this. The police were reluctant to prosecute for the usual reasons – greed, desire for a quiet life – but largely because they knew the act was not supported by a social consensus and was indeed regarded with deep hostility by much of the population. It is very difficult to pay a policeman to turn a blind eye to murder, not just because murder is very serious but because the police are aware that society is in no doubt that murder is wrong. Some police could accommodate themselves to street bookies because, as far as betting was concerned, they knew the reverse to be true. On sheer prudential grounds, therefore, the government’s moral neutrality towards gambling is sensible.

On other criteria, however, the bill – and the government’s policy towards gambling more generally – is less successful. To begin with, it is primarily, though not exclusively, a gaming and not a betting bill. Its main aim is to increase the number of casinos and gaming machines and to introduce a new category of ‘super-casinos’. In the hierarchy of British gambling, gaming has always stood at the bottom. Over the last century the varieties of British gambling have been ranked in a kind of intellectual pecking order. At the top are those where skill or knowledge are thought to be necessary or at least helpful – betting on horses, for example, or (at a pinch) the football pools. (That British law allowed skill, real or supposed, a legitimating role in gambling is one of the reasons it was difficult to devise foolproof prohibitory legislation.) At the bottom are those where only luck matters: lotteries, for example, which are disliked by serious punters, or, more recently, fruit machines and those palaces of chance, casinos. In our usage the word ‘casino’ is almost always pejorative. When Keynes said that any economic system run on the principles of a casino would end in tears he chose his words with care. Besides, in the popular mind casinos have some association with the mafia. British casinos are not, in fact, run by the mafia; the authorities and the casino operators’ association keep a tight control on them. Nonetheless, the government has decided to extend gambling via an institution which has few social or historic roots. Nor has it made a serious attempt to defend its decision. That casinos are agents of urban renewal is utterly fanciful. In any case, Britain does not need more casinos. It already has more than 120: London alone has more than any other capital city. In consequence, as Miers points out, the economics of an extended casino ‘market’ are fearsomely difficult to regulate.

Nor does the government’s policy meet the two criteria of a democratic betting tax. The first is that gambling should be taxed, but the revenue raised should be returned to those who pay it, and that it should not comprise a significant part of overall taxation and expenditure. The second is that gambling should not be regressive: it should not redistribute income upwards. It could be argued that any taxes on gambling are purely arbitrary; that there is no intrinsic reason it should be taxed at all. In part because much of it has been illegal, the Treasury has never been significantly dependent on revenues from gambling. It has, however, always looked for ways to tax gambling, and given the large sums involved this isn’t surprising. That it will be taxed seems inevitable. But the British government, as Miers notes, has not traditionally exploited gambling, as many American and Australian states have, to fund essential public services.

Here the introduction of the National Lottery marked a real break. As a ‘good cause’ tax it has been used to fund the rehabilitation of the country’s cultural fabric. Sensitive to the criticism that most of the good causes on which the lottery’s profits were being spent were middle-class causes, in 1998 Blair’s government widened the definition of ‘good cause’ to include some things that looked like essential services – health and education, for example. This is something that social-democratic governments should not do. There is a marked tendency, especially in contemporary English-speaking societies, for governments that are too cowardly to tax the rich to rely on duties from gambling, and on other indirect taxes. (In fact, one of the few advantages of casinos is that they are often the only way high rollers can be forced to pay any tax, albeit indirectly.) The National Lottery is especially worrying. It has always been defended on the grounds that the funding it provides is ‘additional’ rather than ‘substitutive’: the good causes it supports are those which, however good, would not normally receive government funding. This argument is suspect if not actually spurious. Lottery money has already been used to ‘substitute’ for expenditure cuts which should never have been made. The buyers of lottery tickets have found themselves repairing dilapidated university libraries and decaying art galleries.

Besides, if the causes funded are deemed ‘good’ – that is, socially or culturally important – the decision not to fund them out of ordinary taxation (as they would be in much of Western Europe) is a political one. The distinction between ‘additional’ and ‘substitutive’ is probably unreal: all lottery funding is substitutive. Even though dispersements on social good causes – such as health – satisfy the criteria that the profits should in effect be returned to those who buy the tickets, a more democratic lottery would be one in which the chances of a ticket-buyer winning a significant prize were much improved, while the good causes were supported out of conventional taxation. Now, however, the government finds itself ever more reliant on the National Lottery for the funding of social good causes – an unreliable source of revenue which it can make reliable, as Miers observes, only by encouraging us to buy even more lottery tickets. The lottery has also had (presumably) unintended economic consequences. The resale value of a newsagent’s, for example, is now probably partly dependent on the number of lottery tickets it sells – just as, should the government permit pubs to have a larger number of fruit machines, the value of a pub will partly depend on the number of machines installed.

Much of our gambling represents a regressive tax. Since anyone who bets will in the long term lose, unless he or she is unbelievably lucky, betting is by its nature regressive. But this is accentuated by the structure of the industry. The paradoxical consequence of legalising betting and gaming, and extending the means by which we can bet, is that income has been transferred from one class to another – from the wage-earner to the shareholder. When mass betting was on horses, off-course and illegal, income was redistributed within the working class; the bookies and their runners were drawn largely from the same class as the betters. Had we simply legalised the activities of the street bookies this might have carried on, at least for some time. But the corner bookie disappeared, to be replaced by a small number of betting chains which are public companies. About half of Britain’s betting shops are owned by three companies: William Hill, Coral and Ladbrokes; the football pools likewise. (In defence of the government, it should be noted that the profits of the bookmakers are now taxed directly.) The National Lottery is even more regressive. As an organisation it transfers money, very broadly speaking, from the working class, and probably from working-class women especially, to the ‘educated’ middle class (Miers is less critical of it on this score) and, as a private rather than a state monopoly, from everyone who buys its tickets to its shareholders. Which it has done, on the whole, very well.

There is a final criterion, just as important as the others: that of social amenity. Do the profits from gambling add to the amenity, the possibilities of the good life, of those who bet? Here we can learn from Australia. The Australians are very heavy punters, and in the last forty years or so their governments have encouraged them at every turn. The reporting of Australian gambling in this country has usually been negative: it has been seen as an object lesson in what to avoid. Much in Australian gambling is indeed undesirable, particularly the increasing dependence of state governments on betting and licensing duties, but the profits from gambling (mainly via gaming machines) have brought the possibilities of the good life to Australians in a way unimaginable in this country. They finance a network of clubs – in effect open to everyone, and usually operated by the RSL (the Australian equivalent of the British Legion) or major sports like rugby league or Australian football or lawn bowls – which provide facilities for every kind of hobby or sport, dances or pop concerts (often with big-name pop stars, since the clubs are wealthy), and excellent, cheap food from all parts of the world. They host the sorts of wedding receptions and birthday parties that would almost bankrupt you in Britain. They give generous support to local institutions and charities. They have had (for better or for worse, but most think better) a remarkable effect on cultural taste. One example: while having dinner recently in a club in a northern New South Wales coastal town, I overheard a man, whose T-shirt seemed to indicate he was a roofer or tiler, asking at the bar for ‘something dryish, perhaps a merlot’. This would have been unthinkable a generation ago. As institutions they are very democratic, at least in spirit, something not to be dismissed in a country whose democracy is fragmenting by the day. They are almost indispensable in the suburbs of the large cities, even more so in country towns, and they are made possible because they pool the discretionary income of their members via the profits from their members’ gambling. They unquestionably add to the social amenity of their members’ lives. Instead of proposing new casinos, which will not add to the social amenity of British life, the government – since it wants us to gamble more, or is not against our gambling more – should persuade us to do it in the working men’s clubs or British Legion clubs or community clubs which already exist, which already have gaming machines and already support many of the activities backed by their Australian equivalents, though not on the same scale.

Gaming machines in pubs, however, do not add to social amenity. The profits are rarely returned to those who bet and the social purpose of the pub – the drinking, talking and intimacy – is undermined by the paraphernalia and noise of gambling. Australian clubs are big enough to contain both gamblers and non-gamblers without one intruding on the other. That is their social design. Australian pubs are big and raucous by British standards, but their design is not the same as the clubs and was never intended to be so. What’s more, the spread of gaming machines to pubs has weakened the finances of the clubs and thus their capacity to discharge their social responsibilities. A significant increase in the number of gaming machines in British pubs should therefore be resisted. The Gambling Review Report has recommended that there should be an ‘ambience’ test: in those institutions designed to serve a number of purposes, gambling should not be permitted. (The beauty of the casino is that its only purpose is gambling.) Such a test might protect the character of the British pub, since gaming is still marginal to its activities. Unfortunately, the government has rejected the recommendation.

In devising a policy for gambling there are a number of criteria that a Labour government should attempt to meet. The Blair administration’s record so far is mixed. It has been right to abandon a moral criterion, to accept that people like gambling and that they should be allowed to do it. It has also learned from history that any attempt to impose a moral criterion, even if desirable, is largely futile. By other criteria, however, it has been less successful. There is virtually no justification for increasing the number of casinos; the government is persisting with forms of gambling which are, in practice, regressive, and is inclining towards the funding of public goods and services via a lottery which is not only regressive, but unreliable. Nor has it done much to encourage gambling in those institutions – like working men’s clubs – where the profits would go towards social spending which is genuinely ‘additional’, on facilities and activities which the state would almost never provide.