Tony Blair’s five-year project to liberalise gambling is in tatters after a shock defeat in the House of Lords. Yesterday’s votes in the Commons and the Lords were meant to be the culmination of his attempts to redefine gambling from a vice to a mechanism to help the poor. But last night there were doubts that he would be able to force the legislation through Parliament before he left office.

Tessa Jowell, the Culture Secretary, has indicated she is highly unlikely to bring back the legislation before the May local elections. This would leave a matter of weeks to attempt to overturn the Lords decision during which a Labour leadership contest is expected to be underway.

This will make getting controversial legislation through Parliament more difficult.

Once Gordon Brown takes over as Prime Minister, which is expected to come at the start of July, the chances of Manchester getting its super casino recedes yet further.

Mr Brown sees gambling in very different light to Mr Blair, as indicated by his decision in the budget to tax the super casino at 50 per cent.

For more than a hundred years, the Methodist and Nonconformist Churches attempted to persuade politicians to keep gambling at the fringes of British society.

They largely succeeded. The first betting shop did not open until 1961 and casinos were restricted from opening in all but a small number of areas.

But Tony Blair argued that people already regularly visited betting shops and bingo halls and had a right to choose how to spend their money. He said that the Government should no long stand in their way if they wanted to go to casinos, which could also bring jobs and money into deprived areas.

This resulted in the highly controversial Gambling Act 2005. Outlining the Government’s plans for the biggest liberalisation of gambling legislation since the 1960s, Tessa Jowell, the Culture Secretary, said that the legislation was all about protection. “If problem gambling rises then [the Gambling Bill] would have failed and it would be bad legislation and it would have defeated the intention and the purposes that we have,” she told a committee.

MPs and peers were highly suspicious of this claim. The legislation scrapped the rules requiring people to register at a casino 24 hours before being able to play. Within weeks of this change in 2005, casino bosses were boasting that they had received 100,000 additional visits, three times what the industry estimated. Opening hours were also extended and alcohol was allowed on the gaming floor. The number of betting shops mushroomed and poker games are about to be allowed in pubs.

The Conservatives said that the legislation is littered with loopholes. Under the 2005 Act, the existing 140 casinos are restricted to 20 jackpot slot machines, but the legislation contains no limit on semi-auto-mated roulette terminals.

At the same time, the internet brought gambling to every living room, and 2.5 million people a day play internet poker. Few internet gaming companies are likely to take up the offer of opening in Britain, where it will be heavily regulated and taxed at 15 per cent.

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