Government 'promised casinos cut in gambling tax'

American casino operators claim the Government has offered to slash taxes on gaming to encourage them to invest in Britain, it was reported last night.

American casino operators claim the Government has offered to slash taxes on gaming to encourage them to invest in Britain, it was reported last night.

Frank Fahrenkopf, head of the American Gaming Association, said that officials had told him the tax would be cut from 40 per cent to between 15 and 20 per cent.

Speculation that a reduction in tax was on the cards was fuelled by a briefing note sent by Culture Secretary Tessa Jowell to Labour MPs, advising them that the expansion of casinos envisaged in the Bill would be "revenue neutral".

Meanwhile, the government is to head off a damaging row over plans to allow Las Vegas-style casinos in Britain by announcing strict planning rules that will give people living in the district the final say on whether they should be built.

Last night a spokesman for the Department of Culture said reports of plans to build 250 casinos were exaggerated and denied it had made any tax break offer. Any decision on tax was a matter for the Treasury, said a spokesman.

"Our estimates are between 20 and 40 more casinos. One of the main checks is the powers the Bill gives people to have a voice and for local authorities to say no to new casinos," he said.

The Government is expected to publish the planning rules when the Bill returns to the Commons in the next few weeks. Gordon Brown, whose Treasury would receive a windfall from tax from the casinos, is believed to be concerned that people with little cash to spare could find themselves in debt after being hooked on fruit machines or the gaming tables.

Others believe gambling addiction could increase. Some Labour MPs fear revenue from poor punters in the UK could swell the coffers of big American gambling firms but fail to regenerate run-down areas.

MGM, one of the world's biggest casino enterprises, is said to predict that 10 per cent of its profits could come from the UK in future. Lord Levy, Tony Blair's fundraiser, is reported to have met Lloyd Nathan, an executive of MGM Mirage, in the summer, shortly before the proposals to allow super-casinos were published.

There are concerns that British casinos, which have operated in the UK for decades under extremely tight regulations, could find themselves at a competitive disadvantage next to the American operators.

But Tessa Jowell this weekend accused opponents of elitism. "There's a whiff of snobbery in some of the opposition to new casinos, people who think they should remain the preserve of the rich," she said. "Others find them gaudy and in poor taste; others who don't want the big investment that will come from the United States."

Yesterday Ms Jowell's operation of the National Lottery came under fire from John Major, who established the lottery when he was prime minister. On Breakfast with Frost, he accused ministers of using the cash to fund government programmes including health care.

He said Labour had diverted perhaps up to half of the money raised from ticket sales to activities normally funded from general taxation.

But Ms Jowell said: "The Tories have too narrow a definition of a good cause or the public good."