Casinos plan could double tax revenue

New laws creating a gambling free-for-all could more than double the tax revenue generated by gaming and betting duty, according to experts.

The extra money could help plug a hole in Chancellor Gordon Brown's public finances, which independent economists believe will require £13billion a year of tax rises after the general election. In a "halo effect", the economy also stands to benefit from increased exports and employment if predictions of a Las Vegas-style gambling revolution become reality.

However, there could be some negative economic effects if a gambling obsession were to hit savings, the work ethic or new business formation. Critics fear the expansion in opportunities to gamble could see the number of addicts more than double.

The Treasury has not yet set out the tax regime for a deregulated casino industry, but the hope is that Mr Brown will outline the Government's plans in his pre-Budget report next month.

Experts say the industry's best hope is for a 15 per cent flat-rate tax, in line with the betting duty levied on bookmakers' gross profits. A flat rate would streamline the bewildering array of taxes that currently exist. For example, a gambler playing roulette online in a betting shop is liable to a different tax rate from one playing at a traditional gaming table.

Iain Wilkie, partner at Ernst & Young, said: "The Chancellor needs to strike a balance between maximising revenue for the Treasury and setting the tax too high so it hits investment and the leisure industry.

"The new-style casinos should be relatively profitable and will therefore be attractive places to raid for tax."