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Representatives of the United Kingdom's betting industry are urgently seeking a meeting with the Treasury to avert a prohibition situation.

They have written to Treasury minister Stephen Timms asking for a meeting to discuss the government's response to the growth in off-shore tax-free betting via the internet and telephone.

They have asked the government instead to accept their proposal of a cut in the rate of general betting duty from 6.75 per cent to 3 per cent.

In the letter, Warwick Bartlett, chairman of the Bookmakers' Committee of the Horserace Betting Levy Board, refers to rumours indicating that the government is considering legislative action to prevent UK residents from betting off-shore to avoid the high level of betting duty.

The letter points out that prohibition does not work. The complete inability of the government to reduce the incidence of illegal gambling in the UK, currently estimated in official figures as nearly £1billion per year, demonstrates this.

It also states that taking action against UK companies with off-shore operations would destroy their international competitiveness and UK residents would simply switch to reputable foreign-based sites.

Bartlett said: "The government seems to be torn between a desire to protect existing short-term tax revenue, and the prospect of developing the UK as a major world force in gambling with all long-term revenue, economic, and employment growth that would bring.

"But there is no real choice. Prohibition would cut the UK industry off at the knees and the gainers would not be the Treasury, but overseas-owned internet gambling sites."

Meanwhile Victor Chandler are to appeal against a High Court decision on Wednesday which ruled that it was illegal for bookmakers based outside Britain to advertise on text services.

Will Holt, a spokesman for Gibraltar-based Victor Chandler International, today said: "We are going to appeal against the High Court ruling.

"It's for gamblers out there who can benefit from tax-free betting and protect them from fly-by-night dot com companies.

"The government are missing out on an opportunity to make Britain a potential centre for betting excellence."