The unpopular tax was replaced by a 15% deduction on the gross profits of bookmakers, and was a concessionary move announced in Chancellor Gordon Brown's last budget to entice some of the major UK players back from their offshore, low tax locations.

Although it was generally a popular move, some bookies are still not happy with the amount of tax they are obliged to pay - leading officials from William Hill estimate that bookmakers will have to increase turnover by around 30% in order to cover the new tax.

Meanwhile, a similar situation looks set to unfold in Ireland, where bookmakers have been demanding that Finance Minister Charlie McCreevy reduce or abolish the existing 5% betting tax in order to allow them to compete with their UK counterparts. The government has insisted that nothing can be done until the budget in December, but there are fears that even then Mr McCreevy will leave the tax unchanged.

As a result, several leading Irish betting agents have moved their telephone betting operations outside the Republic in order to better compete, a move which it has been estimated will cost the government around £6 million in lost taxes if it does not act.