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Cost of UK's gambling habit: £10bn 29/09/2007
Simon Bowers

The money lost by British gamblers will exceed £10bn annually next year - a rise of 50% in nine years, and the biggest jump since the 1960s.

The losses have been driven by abolition of betting duty, the emergence of online betting, poker and casino sites, and a steady unwinding of regulatory constraints. But the biggest single drain comes from a new type of slot machine, offering video roulette in betting shops.

Commentators label the terminals the "crack cocaine of gambling". Estimates produced for the Guardian by a leading government adviser show £650m a year is taken from punters by the terminals - a sum almost matching the conventional casino industry's entire takings.

Fixed Odds Betting Terminal
Fixed Odds Betting Terminal
The Gambling Commission, the industry's new regulator, this month said in a report that one in nine people who played touch-screen roulette were classified as addictive or problem gamblers - the strongest link in any form of gambling.

Despite early pledges to ban the terminals, the government pushed through its Gambling Act in 2005 legitimising betting shop roulette and bringing it under the commission. The Department for Culture, Media and Sport last night insisted: "[Roulette machines] are still on probation. We will monitor them closely."

Jeremy Hunt, the shadow culture secretary, said: "Gordon Brown has used [abandoning] the supercasino as a red herring - as the report shows, the real cause of problem gambling lies with betting shop roulette machines and internet gambling, and the Gambling Act has failed to address either of these. We need a clear strategy from the government"

One in four calls to a helpline charity, Gamcare, are over betting shop roulette. Anthony Jennens, its chairman, said: "They're easily accessible, rapid-play, and you win or lose rapid rewards - hallmarks of games which tend to addiction."

Leighton Vaughan Williams of Nottingham Business School said British punters lose £9.5bn a year across all gambling- a 36% rise on £7bn lost in 1999, the year online gambling emerged. Excluding the lottery - the "softest" form of gambling - the annual loss from hard gambling widened by 56% in eight years to £7bn.

An adviser to both the culture department and to Revenue & Customs, Professor Vaughan Williams, said deregulation and online innovation will fuel the boom next year. He conservatively predicts the losses will exceed £10bn for 2008.

This sits uncomfortably with the government claim that the 2005 act had "protection of the public, especially children and the vulnerable" as its "top priority".

The boom started with emergence of online wagering, but was boosted by Gordon Brown's abolishing betting duty in 2001. "If you cut the price of anything you are going to get more of it - and the price of gambling has dropped," said Prof Vaughan Williams. The most dramatic craze due to the tax change was touch-screen roulette. He estimates the 24,500 UK terminals take £650m a year.

David Harding, outgoing chief executive of William Hill, confirms that one in three pounds lost by his punters is touch-screen roulette. Just over half of all terminals belong to Ladbrokes and William Hill; together they take £420m a year.

The craze was not anticipated by ministers, who initially reacted by declaring the terminals "unlawful" hard gaming not permitted outside casinos. But they were legitimised by the 2005 act.

The Association of British Bookmakers said last night: "Our machines are fully regulated now: they are licensed."