Strict rules which prevent the spread of casinos and high-stake gambling machines should be relaxed, MPs said today.
Local councils should be allowed to permit betting shops to operate more than four high-stake gambling machines, which can accept stakes of up to £100 and offer prizes of £500, the Commons Culture, Media and Sport Select Committee said.
Casinos should be allowed up to 20 of the machines, the MPs claimed, adding operators across the sector should be charged lower fees by the industry regulator, the Gambling Commission.
The recommendations are likely to anger anti-gambling campaigners, who believe there is too much temptation on the high street for those with addictions.
But one source close to the MPs described the most recent legislation, the Gambling Act 2005, as "puritanical", adding it was now time to relax the rules governing the industry.
Ironically, the 2005 Act originally set out to allow the introduction of Las Vegas-style super casinos across the country, with fruit machines offering unlimited payouts.
However, the plans, proposed by then culture secretary Tessa Jowell, were watered down significantly in the face of fierce public opposition, with super casinos cast aside and the creation of the Gambling Commission to regulate the industry.
Today, MPs said the commission was too bureaucratic and expensive, adding it was not for Whitehall to decide on the location of casinos in the UK but local councils instead.
John Whittingdale, Tory chairman of the committee, said: "Gambling is now widely accepted in the UK as a legitimate entertainment activity.
"We took a lot of evidence in this inquiry, from all sides, and while we recognise the need to be aware of the harm caused by problem gambling, we believe that there is considerable scope to reduce and simplify the current burden of regulation and to devolve decision-making to a more local level.
"The 'reluctantly permissive' tone of gambling legislation over the last 50 years now looks outdated."
The committee of MPs, from across the main parties, said the Government also needed to make it more attractive for online operators to base themselves in the UK. Taxes on the industry were too high, pushing most internet-based operations abroad, their research found.
And they argued that by allowing high street betting shops to operate more than four high-stake machines, it would prevent them clustering together in town centres.
Meanwhile, ministers should develop an information campaign to encourage the relatives of problem gamblers to seek help. There also needs to be research into the problem of gambling amongst children.
Malcolm Moss, chairman of the National Casino Industry Forum which represents the industry, said he was delighted with the committee's findings.
He said: "We are very pleased the committee has recognised the value, integrity and achievements of the British casino industry.
"We are pleased that the committee has identified the failings on the 2005 Act in creating a twin-track industry which puts British businesses at a disadvantage and costs jobs and investment.
"Harmonising the rules on the number and type of gambling products all casinos can have will prevent customer confusion and make it clear what to expect from a UK casino."
Asked whether he expected any opposition to the idea of relaxing the restrictions on casinos, Mr Whittingdale said that in 2005 those who were against the legislation did not want to see the introduction of super-casinos.
Today, there was "little enthusiasm" within the industry for such large-scale gambling venues, but power to choose where a smaller casino could be located should not rest with central government, he said.
Mr Whittingdale added: "There are a number of local authorities who have sought permission to establish casinos and in our view there isn't any reason why they shouldn't be allowed to if it is for the benefit of the local community.
"We think that if it is up to the Government to set the general rules, it should be left to local authorities to say whether they think establishing a casino in their area would be a good idea."