Who'll say no to a flutter?

Gambling gives liberals a dilemma: condemn it and you're authoritarian. Let it be and you're irresponsible

Nasty as the National Lottery may be, you can't help but admire its seemingly limitless ability to transform the world. It slows economic growth by depressing sales, it turns us into a nation of free-spending, party-throwing festival freaks, it deepens class divides and it promotes metaphysical head-clutching in people such as myself and Prince Charles. Nothing touched by Camelot's glittering, astral finger is ever quite the same again.

The latest social transformation to be imposed by this smiling, heartless radical is a relaxation of gambling controls. Since its legalisation in the sixties, the British gaming industry - casinos, bingo, bookies and so on - has been obliged to live within a tight system of regulation. This was designed to keep out criminals, prevent punter exploitation and avoid promotion of gambling. The idea behind the third point was that gambling capacity should only fulfil "unstimulated demand" - more people or more money should not be lured into gambling by aggressive advertising, marketing, whatever.

The moral basis of the concept of "unstimulated demand" is clear: the desire to gamble should be accommodated legally rather than illegally, but gambling is bad in principle and more gambling is worse. Any legal framework should, therefore, meet demand rather than create it. The spirit of gambling legislation in the Sixties was that it was better that people did not gamble.

This system of grudging tolerance has produced a stable and relatively crime-free industry. But now there is the lottery. This, to say the least, subverts the legislative framework. The concept of "unstimulated demand" has become a joke. Camelot, with the endorsement of the Government, is stimulating gambling demand like crazy. Billions flood in, dwarfing the sums taken at bingo halls, bookies and even West End casinos. Unsurprisingly the old gaming industry is irritated.

I sympathise. For 30 years the gaming companies have lived with a system of regulation that kept them low-key, anonymous and, on the whole, pretty shady-looking. The official ideology was that these guys were legal but still sleazeballs, peddling corruption to an upright but gullible public. They were tolerated, not approved.

Then, suddenly, it's all Anthea Turner, Lenny Lottery, cakes, opera houses and ale. Gambling, it turns out, is OK, even - when it is done in the name of "good causes" - virtuous. The hypocrisy is flagrant.

Defenders will say the lottery is the softest type of soft gambling, involving low risk and infrequent bets. Routinely it is described as "a flutter", on a par with a bet on the Grand National or a charity sweepstake. It is so far removed from the "hard" gambling of blackjack or roulette that it is actually in a different category.

But this doesn't work. Bingo is, if anything, softer than the lottery in that all the money gambled, except for tax, is returned as prize money - the operator makes his profit out of membership and participation charges. And the culture of bingo is, as the Home Office paper puts it, "neighbourly", an occasion for gossip as much as gambling. Yet bingo is tightly controlled with fierce restrictions on advertising. The "soft gamble" argument is irrelevant because all gambling, apart from the lottery, is still contained by the principle of "unstimulated demand", the principle that gambling of any kind is undesirable.

Given the contradiction, the Government is obliged to respond. Of course, it cannot admit that the lottery has anything to do with this response. The Home Office's suggestions for loosening up gambling controls - allowing 13 new casinos, some advertising and changes to the club rules of gambling establishments - are presented as a healthy package of regulation. "Eyes Down...", says the horribly snappy headline on the accompanying press release, "...for Gaming Deregulation". The rules, the minister Timothy Kirkhope insists, are simply being updated and, after all, "the gaming industry is an important part of the British economy, providing jobs and employment opportunities."

The truth is, of course, that the lottery has swept away the entire official climate of disapproval. No government can expect to raise money from betting while sustaining the underlying legislative ethos that gambling is intrinsically a bad thing. It is an inconsistency even more gross than arming our enemies to kill our soldiers. In the long term I suspect the pressures of this contradiction will lead to an even more radical programme of deregulation. For what the lottery has made clear, among other things, is that the stimulated demand for gambling is effectively limitless. So, on the demand side, we are all gamblers now and, on the supply side, the industry and the new punters will expect more freedom and variety in their betting outlets.

But the deeper issue is how we define and defend social goods. The movement from legalised disapproval to deregulation and "an important part of the British economy" is a movement away from post-war paternalism. The Sixties legalisation of gambling was a clear example of liberal social control - you can gamble but we will look after you. But the "we" in that formula has become problematic. Who, after all, is "we" if it is not "us"? Democracy is legitimised by the people, we are the people and, clearly, we like gambling. In theory we might express the desire for control, but in practice we indulge in a big way. If what the people want is manifested by what they do, then democracy is logically obliged to give them what they want.

Attempts at social legislation collide with this complexity. The lottery and the ensuing proposed changes to the laws are simply the most vivid demonstrations of a general trend. Any liberalisation will produce contradictions that will undermine any intended restraints. If, electorally, we said we wanted to re-impose such restraints we would have to do so against the expressed wishes of huge numbers of people. Paternalism cannot survive the option of the open market.

But paternalism is only a rather derogatory word for a system which aspires to define the good in higher terms than mere convenience. Liberal paternalism was an attempt to devise such a system for a secular society. It failed. Now the liberal cannot define the limits of his liberalism, because any such definition would be regarded as illiberal, a hopeless, doomed attempt to impose his values on the people.

The truth is that gambling is bad for you, a stupid, risky waste of time and money. The question is: who is going to say it, now that we can't?