A new tax could be on the cards for gambling machines -- or operators could face tougher rules governing their use.

Government is known to be considering rewriting the law on the hi-tech video card games.

Premier Jennifer Smith and Finance Minister Eugene Cox are to meet with operators tomorrow -- and Mr. Cox's presence suggests a tax option as the favourite.

But yesterday Tom Gallagher, chairman of the Chamber of Commerce restaurants and nightclubs division, warned tougher rules or an outright ban would be a gamble with the future of some businesses -- already reeling from declining tourism.

Government, however, was staying tight-lipped over their plans for gambling machines in advance of the meeting with club owners.

The machines mostly offer video card games like poker and blackjack but the meeting -- billed as private -- will also discuss card machines, where gamblers pull off strips to see if they have a winning hand.

But Mr. Gallagher welcomed the opportunity to put the industry's side of the argument before any fresh moves are made.

But he warned that an outright ban on the controversial machines would hit an industry already suffering from a major decline in tourism.

Mr. Gallagher said: "It basically seems Government wants to discuss the policy on the use of gaming machines.

"Government has made reference to the fact that they were going to review and define their policy in relation to gaming machines.

"I'm heartened by the fact that the Premier is obviously looking to meet with all the operators and discuss the future use of these machines.'' News of tomorrow's meeting between operators of the machines, Ms Smith and Mr.

Cox is a strong hint that Government may be looking at a tax.

Mr. Gallagher said although he was not an owner of machines, he, along with other pubs on the Island, had gambling machines installed.

He said: "The advice we have been given by the people who are effectively the owners is that they have received a legal opinion that they are within the law.'' Mr. Gallagher acknowledged that some on the Island might be upset by gambling on moral grounds -- and that he had his own opinions on the subject.

But he said: "These machines reflect an international form of entertainment to people -- something which Bermuda is somewhat lacking.

"And they are, to some establishments, essential in maintaining the operations -- and the employment hours and everything which goes with it.

"The continuing downturn in tourism has affected all such establishments.

"It's my understanding a number of places are facing difficulties and it's also my understanding that, moving into the winter, we're going to see a reduction in employment.'' Mr. Gallagher added: "By and large, we respect people's viewpoints in relation to the use of these machines. But there is a bit of hypocrisy in this whole process in that many people in Bermuda really enjoy using them.'' And he said Flanagan's -- in common with other pubs -- took a strict line on the age limits for drinking and using the gambling machines.

Legal opinion is divided over the machines. The Lotteries Act, drawn up in the old days of Las Vegas-style one-armed bandits, appeared to outlaw games of pure chance, but not those involving some skill. But some argue differently.

A Police spokeswoman said: "At this point it's a grey area and we're governed by the law as it stands.

GOVERNMENT GVT