Gordon Brown demonstrated his personal distaste for gambling by announcing a rise in gaming duty to 50 per cent for the new supercasino.
The Chancellor also revealed that the new tax on internet gambling sites based in Britain will be five times industry expectations, at 15 per cent.
The move is a stark indication of Mr Brown’s much cooler attitude to gambling than Tony Blair, and has left the British industry reeling.
Mr Brown has indicated to colleagues that if the Government manages to get plans for the first supercasino in Manchester through Parliament next week he is unlikely to give approval for any more. The rise in gaming duty by 10 per cent will apply to large casinos that make more than GBP 10 million on games a year.
Smaller casinos also face tax rises: from April 1 the 2.5 per cent starting rate of gaming duty has been abolished and the 12.5 per cent rate increases to 15 per cent.
The Treasury defended the move, saying that it was needed “to ensure that this vibrant and expanding sector continues to make a fair contribution to tax receipts”. It has calculated that this will raise GBP 30 million this year and GBP 35 million subsequently.
The Rank Group, one of Britain’s biggest gambling companies, said that it expected the tax rises to cost it GBP 8 million. The tax is applied to “gaming yield”, which is the amount placed as bets minus the winnings paid out.
The move has raised concerns that casino operators may be deterred from bidding to run the supercasino or one of the 16 other casinos that were announced in January and are likely to be caught by the GBP 10 million threshold.
Karen Potts, a partner at the accountant Deloitte Leisure, said: “It may well discourage operators from bidding to run the new casinos. Some have probably been working on an effective tax rate of 20 to 25 per cent of duty, and I would think this change could well put that up as much as 25 per cent.”
Other accountants said the higher than expected tax on internet gambling meant that such companies were unlikely to want to move to Britain. Martin Dane, of BDO Stoy Hayward, said: “This sounds the death knell for the Government’s aspiration to be the world leader in regulated remote gaming.”
John Coates, from the Remote Gambling Association, said: “This decision means that the UK has effectively turned its back on the industry.”
Bingo operators said they had hoped for a VAT abolition to help to offset the effects of the smoking ban. Lady Cobham, chairman of the British Casino Association, which represents most domestic operators, said that the changes would cost operators GBP 100 million over three years.
“This tax hike is yet another swipe at a great British industry and British jobs, and makes our vigorous pursuit of a judicial review of the Gambling Act all the more urgent.”
Hugo Swire, the Shadow Culture Secretary, said: “The Chancellor is now set to make hundreds of millions of pounds from new casinos. If he was really concerned about gambling addiction, this revenue would be ringfenced to help the vulnerable.”