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Gambling a-gogo
by Graham Rock of the Observer

On 1 May 1961, life became easier; legal betting shops opened for the first time since the middle of the nineteenth century. The nearest to my school, a short walk away, was a seedy room in the backstreets of Croydon, managed by a formidable middle-aged blonde. When she paid out the winners, her scowl would have petrified a Blackpool landlady.

The premises were dingy by government decree; the 1961 Betting & Gaming Act required that licensed betting offices did not encourage loitering. The participants were expected to enter, place a bet, and leave with the alacrity and discretion of a Cabinet Minister visiting a bordello.

For more than 100 years, the public had been denied the legal opportunity to wager in cash away from a racecourse. Betting shops flourished in the first half of the nineteenth century, more than 400 operating in London alone, but the Attorney General noted: 'The mischief arising from the existence of these betting shops was perfectly notorious.' The 1853 Betting Houses Act closed them down, and for more than a century government and punters were united in a hypocritical alliance.

Betting continued. A labyrinthine network of bookmakers' runners serviced the nation's gambling instinct, and illegal shops continued to operate until they were legalised 40 years ago.

Fred Done owns 256 betting shops, and is the largest independent bookmaker in Britain. The recently published 'Rich List' estimated the wealth of Fred and his brother, Peter, at a conservative £78 million, but he began with nothing. In 1959, the 15-year-old Fred worked with his father in the family's bookmaking business.

'He traded in Knott Mill, one of the rougher areas of Manchester, under a tarpaulin in a back yard. He would open the shop from 11 to three and from five to seven for the evening dogs. Bets were written on any scrap of paper, with a nom de plume on the back.

'We had runners in all of the factories in Trafford Park, one of the biggest industrial complexes in Europe. We would send a taxi round every day, and the bets would be handed over in clock bags.' These were leather bags which, when closed, set the time on a clock, confirming that bets had not been placed after racing had started.

'There were no books, there was no income tax, no betting duty. What you had at the end of your day was profit. The only payment you had to make was bribe money to the police, two or three quid a week to keep them off your back. If they were going to raid you, they'd let you know.' Bookmakers' runners, who earned 10 per cent commission on all the bets they collected, were imprisoned automatically for a third offence; when a raid was imminent, substitutes were employed.

'Of course, punters were not as well-informed then. I once said I felt sorry for them and my father said, "If I ever hear you say that again... Always remember, skin 'em and stamp on 'em".' Limits on multiple bets protected bookmakers from excessive losses. The businesses were highly lucrative and had to be protected from predators. 'I'm choosing my words here. You would get threats and you had to look after yourself. You had to be tough to stay in the industry. We had runners in all the pubs as well, and there was a lot of competition. The pubs were probably worse than the factories to control.'

In 1961 Done went to work for the Peters chain of betting shops in Salford, marking up prices, and after a few years he had been promoted to manager of their credit office. 'There was no [security] camera, no till. In those days it was so good that you could allow for the fiddling and still make money. But when betting tax came in and we started trimming the odds, it became a business.'

John Banks, who owned a chain of betting shops in Scotland, and who later became one of the biggest racecourse bookmakers, described the shops as 'money factories', a description that attracted the Government's interest. In 1966 they introduced betting tax.

The following year, Done started out on his own. 'Two weeks after we opened our first shop, foot and mouth struck. I had no cash and thought we wouldn't make it through. Most bookmakers closed, but we kept going with the dogs, and the punters came. They wanted to bet.'
One of the first men to realise the potential of betting shops was Cyril Stein of Ladbrokes. He acquired shops, no matter how run down, no matter the location. He moved the licensed premises, refurbished them, and turnover soared. 'Cyril was a man before his time,' says Done. 'I've never liked Ladbrokes. They've always been too aggressive, but I looked up to them. I think they've lost it now.'

Betting tax was increased and the Government, under pressure from football pools companies, imposed a 33 per cent tax on the fixed-odds coupons issued by bookmakers. The number of High Street shops began to decline, and now there are just over 8,000.

Until the mid 1980s, punters could listen only to an audio commentary on races, provided by the Exchange Telegraph Company. Each region had a commentator with an appropriate accent. 'When the regular man had a day off, a cockney took over. We hated him.'

Not until 1986 was regulation relaxed. Television screens were permitted which, a year later, would bring live racing via satellite to the majority of shops. Bookmakers were allowed to have two amusement-with-prizes machines and to provide soft drinks and refreshments. They were permitted to open in the evenings and on Sundays, but duty at 10 per cent (nine from 1996) was driving punters to illegal bookmakers. Still operating in pubs, clubs and factories, they account for a reputed 10 per cent of betting turnover.
'The tax killed off big punters in the shops who wanted to bet the odds-on chances, the man who would have £4,000 to win £1,000. Since offshore betting began, some of my biggest customers have been coming into the shop to see the prices and watch the races, but walk outside to call Victor [Chandler, who pioneered offshore betting] to bet on their mobile phones.'

Frankie Dettori rode all seven winners at Ascot in September 1996, and the betting industry shuddered. 'I wrote out cheques for £1.5 million. Even my gardener won £10,000 off me.' Bookmakers suffered another blow when the Government introduced the National Lottery six years ago, although a strange logic denied betting shops the right to sell tickets.

'The Lottery was a blow. Not necessarily the jackpot, but the scratch cards. They took away significant business.' The advent of off-shore bookmaking, with lower deductions, was the final punch. The Government conceded.

Betting duty will be abolished, perhaps as soon as the autumn, to be replaced by a 15 per cent tax on bookmakers' profits. 'If they hadn't done anything,' says Done, 'the number of betting shops would have been halved within five years. Now, I believe there will be an increase in the number of shops. It's an exciting time. I can't wait to get to work in the mornings.'

Done closed his credit business a decade ago - too much hard work betting against a shrewd clientele that didn't always pay up - but he will be tempted to start again. 'It's a different business now, with punters using Switch and Delta cards - you don't get knocked. I'll also be looking at starting a fixed-odds coupon for football.'

He should do well. Over the years Done's policy of giving more concessions than his rivals has built up a loyal clientele. A Manchester United devotee for more than half a century, Done pays out early those who have backed the Old Trafford team to win the Premier League when they are clear at the top. In 1998 Arsenal finished the season strongly to overtake United for the Championship, a late run that famously cost Done half a million.

The government will study the report of the Gambling Review Body, due in July, before contemplating further changes to betting-shop legislation. The Tote want to install their terminals in pubs and clubs, but the betting industry has one of the most efficient lobbies in Parliament.

John Brown is chairman of William Hill. Apart from a break of eight months when Grand Met took over the company, he has worked for Hills since 1959. The late William Hill was one of the best-known rails bookmakers of the past century, whose credit-betting company boasted 400,000 clients. Initially sceptical, Hill began to buy betting shops in 1966 and now the company he founded owns 1,500.

Brown's father ran a newsagent's shop in the East End of London, and took bets on commission for a local bookmaker. The chairman of Hills, who has bet since he could write a slip, believes that the abolition of betting duty will wipe out illegal bookmakers instantly, boosting turnover.

'One of the biggest changes in my time has been the decline in greyhound betting. In the old days, the dogs represented a third of turnover on Saturdays. You would go to work on a Monday and have hundreds of bets to settle from Saturday night's results. Now it's only a couple of dozen. The Greyhound Express closed, and then the tracks decided that results could not be made available race by race at night to outside agencies. That killed it.'

Brown, too, is now optimistic about the future. 'I think the betting shop will become a mini Las Vegas. Horse racing will flourish, and dog racing. Betting on football will continue to grow and I think we will see a new generation of slot machines in which the result is not determined within the machine.

'If we are paying the Government 15 per cent of profits, we will be able to put in machines that return 95 per cent of stakes to punters.' Numbers games, similar to the Lottery, have proved popular in the last few years. 'We would like the ability to bet on the Lottery, even if we can't sell the tickets.

'The number of shops should increase, but I don't think they will become significantly bigger. You will want one on every street corner. It is still the case that 80 per cent of our customers spend less than 10 minutes in the shop. The British public enjoys betting on horse racing and I think the whole business, horses, dogs, everything, will prosper. In one sense, the high deductions of recent years have protected us. They froze out the skilled punter. The big hitters, the really shrewd punters, will come back, and we are going to have to be proper bookmakers again.'

Such men were scarce in my youth. I might have put on weight in the sixth form but, strangely, when betting became convenient, every ounce I gained seemed to be matched by the corresponding loss of a pound from my pocket.