As representatives from 33 countries met in Ascot yesterday to discuss ways of curbing online gambling, the scale of the dangers posed by internet casinos and poker sites were outlined in a government-funded report.

Its research indicates that three quarters of people who use internet gambling sites were classified as “problem” or “pathological” gamblers, compared with just one in five of those who visit casinos.

The report for the Department for Culture, Media and Sport also highlighted the similarity between gambling sites and video games, which, it said, made them particularly dangerous for children. “Free” games that allow adolescents to learn how to play without betting money “distorted their perception of reality”.

The most significant revelation is that criminals are targeting betting sites to move tainted money and disguise its illegal origins.

This is an embarrassment for the Government because the gambling reforms of last year — which legalised internet gaming in Britain — were introduced to “prevent gambling from being a source of crime and disorder, being associated with crime or disorder or being used to support crime”.

The meeting devoted a session to the dangers of criminal activity and money laundering. According to research, criminals can deposit money under a false name and wager an amount before withdrawing it from their account, or open a remote gambling account to store funds until they can be transferred into a legitimate account, pretending that they are winnings.

Hugo Swire, the Shadow Culture Secretary, said: “It is hard to see how the key aim of the legislation of ‘preventing gambling from being a source of crime and disorder’ fits in with the admission in this government-funded report that online gambling is being used to fund criminal activity.” A spokesman for the department said that the exploitation of internet gaming by criminals was one reason why international regulations were needed.

Ministers insisted that the effort to regulate the online gambling industry was not an attempt to “grab” tax revenue.

Last night the summit ended without agreement over minimum international standards for internet gambling. Ministers were hoping to secure a promise from representatives that they would not allow internet gambling to be a source of crime, that they would ensure it should be fair to the consumer and that it should protect children and the vulnerable. A government source denied that this amounted to failure.

“We never expected to get everyone on board in a day and we are delighted that everyone is keen to work together in future. They are arguing over commas, and the final version will not be very different from today’s draft.”

Richard Caborn, the Sports Minister, who, along with Tessa Jowell, the Culture Secretary, was trying to secure agreement, said that an international working group would be set up. “We now have in place a road map for that will lead to better regulated remote gambling across the world. Those present today agreed to co-operate further in a number of key areas to ensure that gambling remains fair, crime-free, and vulnerable people are protected.

“We will follow this up with proposals for an expert working group representative of those countries present today. We will want this to involve wider international institutions, including Unesco and the global financial sector, to advise on the development of worldwide standards.”

Ms Jowell said that there was an “international appetite” to agree a regulatory structure.

Times Recommends

• Iran arrests relatives of opposition leaders
• Banksy rival has final word in art feud
• Electrician travels 175 miles to change bulb