The years 1979 and 1980 signalled a change in fortunes for the British casino industry. The industry’s structure, in particular in London, had generated an environment perfectly suited to the foreign gambler; the most important were Middle Eastern, mainly Iranian. A majority of Islamic countries prohibit gambling which is prohibited by the Qur’an. The Qur’an states:
O ye who believe! Intoxicants and gambling, (dedication of) stones, and (divination by) arrows, are an abomination, – of Satan’s handwork: eschew such (abomination), that ye may prosper.
Yet, though London was well-placed to provide facilities for a wealthy clientele denied opportunities for gaming in their own countries, their custom declined dramatically after 1979. As the Gaming Board’s annual report observed: ‘notwithstanding the increase in “drop”, facilities in London may well have been over-provided at a time when there has been a decline in the number of people participating in gaming’. The report also identified various reasons why the gaming industry, which in London was very reliant on overseas custom, was now facing difficulties. The strength of sterling, now that Britain’s balance of payments position had improved, ‘made London less attractive to Americans and Arabs; moreover, ‘events in Iran had created difficulties for Iranian gamblers’. The Board here was referring to the revolution which had placed the AyatollahRuhollah Khomeini in power with Iran officially becoming an Islamic Republic on the 1 April, 1979. British casinos were to see a decline in attendances after the revolution leading Playboy boss Victor Lownes to claim, ‘Petrodollars were flowing a little less freely than hitherto’. However, surprisingly, this did not lead to a decline in drop.
In these circumstances it was not surprising that clubs sought various ways to attract customers. ‘Evidence given in support of objections to the renewal of licences of certain London clubs’, noted the Gaming Board’s report for 1979, ‘alleged that practices had developed designed to increase patronage and membership of these clubs’. These included the introduction of guests by ‘persons acting on behalf of the holder of the licence’, paying club members a commission for introducing a guest based on the amount of money lost, and allowing a member introducing a guest a percentage discount on their own losses. The Board’s criticisms illustrate its general concern with the use of agents employed to introduce customers to the casinos, a practice which had become common in London gaming clubs. These abuses had been uncovered by the Board’s own processes. However, the most significant developments of this period of enforcement stemmed from investigations published by Private Eye. The Gaming Board may have entered a period of pro-active enforcement but it was Private Eye that exposed the most significant cases, notably those arising from the rivalry between Ladbrokes and Playboy.
The Ladbroke Group’s casinos were raided late in 1979. According to Gaming Board Inspector Grahame Robinson, the police had objected to the renewal of Ladbrokes’ London licences, so too had Playboy. According to Robinson, of all the major gaming groups operating at the time, Playboy ‘were the only ones that did’. Playboy’s objection to Ladbrokes’ licence sparked a vicious feud between Ladbrokes’ Cyril Stein and Playboy’s Victor Lownes, initiating a cycle of retaliation which led effectively to the destruction of both groups, with Private Eye reporting each and every exchange between the two combatants. Apparently the Gaming Board would look forward to the bi-weekly publication of Private Eye. According to Robinson, ‘Private Eye was a great source of information for us, if something was in Private Eye it was worth looking into.’ The journalist behind the investigations by Private Eye was Martin Tomkinson. According to Tomkinson, the first story surrounding Ladbrokes had appeared in the London News but ‘Cyril Stein had effectively managed to kill it.’ Tomkinson would, in the course of his investigations, strike up a strong relationship with Victor Lownes who would become a source of some of Private Eye’s articles. Private Eye investigations had resulted in the raids on Ladbrokes, and would subsequently report anything of significance in the case against Playboy. By the end of 1979, three of the four London casinos operated by Ladbrokes Group had been closed following the rejection of an appeal at the Knightsbridge Crown Court in November. By April 1980 the group had surrendered all of its casino licences in the United Kingdom.
The case against Ladbrokes attracted attention in the national press. Ladbrokes were a large, well known, successful organisation listed on the London Stock Exchange and, prior to its troubles, considered a sound investment by experts. It floundered on the accusations made by Playboy that its agents had been trawling the high-end casino clubs in London, in order to identify the owners of expensive motor vehicles parked close to rival casinos. The number-plate details of these vehicles were then passed to a private investigator employed by Ladbrokes who then used a police force contact to match the numbers with the owners of the cars. According to Daily Telegraph journalist, Barbara Conway, ‘LADUP, the casino off shoot of Ladbrokes entertainment group, committed a series of breaches of the Gaming Act and “corrupted a member or members of the police force”’. Ladbrokes representatives had tracked down at least one corrupt police officer within the Nottinghamshire Constabulary. This activity was shrouded in secrecy and given, in the best boy scout’s style, a secret codename, Operation Unit Six. Patience Wheatcroft in the Sunday Times subsequently named three former Ladbrokes employees, including Gordon Irvine who was a casino director, who were to be charged with offences under the Prevention of Corruption Act; it was alleged that the Police National Computer (PNC) had been accessed to provide Ladbrokes with names and addresses of car owners. However, Conway and Wheatcroft were simply following the lead of Private Eye which had first reported on such matters in May 1979.
These efforts to identify potential customers were as audacious as they were idiotic. Once the numbers had been collected, ‘a 51 year old former inspector formerly in the Nottinghamshire Constabulary, with a little help from a still serving officer was able to obtain the names and addresses of their registered owners through the Police National Computer’. Ladbrokes were thus provided with, ’10,000 car numbers at 50p an owner’. Surprisingly, Ladbrokes would offer little to defend this action at subsequent licensing hearings. Ladbrokes’ QC, John Matthew, admitted that Andreas Christianson, a marketing director for the company, had arranged for private detectives to take lists of car numbers from rival car parks, but argued that this was not ‘itself any breach of the Gaming Act’. As Private Eye observed, however, the use to which these details were put appeared to breach Section 42 of the 1968 Gaming Act which prohibited advertising of any kind or inviting ‘any section of the public in Great Britain, however selected’ to take part as players’. Possibly the most enlightening statement made during this affair was that of Cyril Stein himself, who claimed in a letter to his shareholders that the activities of Operation Unit Six ‘were normal throughout the industry’.’ This was hardly a glowing reference for the enforcement of the 1968 Act by the Gaming Board.
Once Ladbrokes had gained possession of the addresses of the owners of the cars, their ‘marketing representatives’ would pay the addressees a visit. According to Private Eye:
Most revealing … was the habit of Ladbrokes’ “marketing department” of sending “external hostesses” to the hotel rooms of casino gamblers. This is not believed to be the theme of the latest Ladbrokes’ advertising campaign, entitled: “Let’s Spend the Night Together.”
Private Eye did not make it clear if this approach was made with the use of the addresses gained from the PNC or by commission agents. In the resulting prosecutions of Ladbrokes employees involved in Operation Unit Six, two were ‘found guilty of corruption and given suspended jail sentences’.
That Ladbrokes did not gain any sympathy from the courts was partly due to attempts to remove any incriminating evidence yet to be discovered by the authorities. Conway remarked upon evidence offered by Cyril Stein’s Secretary, Janet Ballard. Martin Tomkinson believed Ballard was the key to the Board’s success against Ladbrokes due to her being an ‘utterly unimpeachable witness.’ According to Ballard, ‘Ladbrokes executives ordered documents to be shredded when police started raiding the firm’s offices’; Michael Kempster, QC for the police, described a ‘“holocaust” of destroyed documents’. Ladbroke’s casino division was doomed and Cyril Stein, Chief Executive of the group, was furious with Victor Lownes, the chief executive of Playboy, whom he believed had instigated the investigation. Stein despised Lownes on account of Playboy’s initial objection to the renewal of Ladbrokes’ casino licences. At a time when custom was tailing off in British casinos, the loss of Ladbrokes’ licences would have been of great benefit economically to Playboy by removing their closest competitor. Private Eye had drawn public attention to the abuses, apparently institutionalised, within the casino industry but, unfortunately for Playboy, Stein believed that this was simply part of a campaign by Lownes against Ladbrokes, the fact that Martin Tomkinson names Victor Lownes as a key source of information for Private Eye’s articles lends support to Stein’s belief. Particularly damaging was the claim by Private Eye that Stein was active in raising funds for Israel. This, according to Private Eye, ‘could see an organised boycott of Stein’s casinos by the handful of top Arabs who have been contributing freely to the Zionist cause, via the chemin de fer and roulette tables of the four Ladbrokes casinos in London’.
Grahame Robinson believes that Stein had decided that ‘if he was going down there were a lot more who could go with him … no question about that’. This appraisal of Stein’s approach is supported by Martin Tomkinson. Tomkinson claims, ‘Victor Lownes made the mistake of joining the objections of the police to Ladbrokes’ licence and sure enough in tit for tat fashion Stein got his own back by grassing up Playboy.’ Stein went onto the attack. According to Private Eye, whose dogged investigative approach was in contrast to that of the Gaming Board, Stein, at a special meeting of the British Casino Association had,
… launched into a tirade against Victor (disgusting) Lownes, proprietor of the rival Playboy Club, which is also objecting to the renewal of Ladbroke’s licences. Stein threatened that unless Lownes withdrew his objections, Ladbroke would “throw all the mud” they had on the Playboy.
Despite Stein’s threat Playboy maintained their objection. As the case against Ladbrokes progressed the future looked very bleak for Stein and his executives. The Gaming Board’s representative at the licensing hearing claimed ‘that knowledge of the illegal car numbers scheme must have gone to the very top of the Ladbroke organisation’. Brian Leary, appearing for Playboy, as Private Eye reported with relish, did not help, attacking ‘the deeply unlovable Stein’. Leary suggested that ‘[e]veryone from the Chairman down knew what was going on’. At this stage of proceedings even Ladbrokes’ QC accepted that ‘senior management either knew, were a party to, or should have known what went on in 1977 when the infamous marketing department was set up’. Ladbroke’s gaming operations were beyond redemption. The Gaming Board’s annual report for 1981 commented, ‘No casino clubs are now controlled by the Ladbroke Group. Of the three licences still held by companies in the group at the end of 1980, two were transferred and one was relinquished during the course of the year’.