Has Lady Luck smiled on Manchester?

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As the bookies might have said, it was a bit of an upset.

The UK's first supercasino will not be built in Blackpool (the odds-on favourite). Nor will it be put in the Millennium Dome.

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The glorious victor in the competition to host Britain's biggest gambling den was in fact Manchester. If you'd taken that bet, you could have won £16 for every £1 you put down, according to bookmaker Paddy Power.

But never mind if you missed out - you'll soon have the chance to gamble away a lot more of your hard-earned cash...

Manchester was chosen because it's one of the UK's 'most deprived' areas. The region is the third-most 'deprived' local authority in England, with 20% of residents living on income support, twice the national average. Educational attainment is also well below the UK average, while the city was named Britain's robbery capital last year by think tank Reform.

But hope is at hand for all those poor deprived Mancunians. As we all know - or certainly, this is how it works in the magical land of Tessa Jowell and New Labour - the best way to improve a 'deprived' area is to build a huge gambling den right in the middle of it. Then you just stand back and watch as all that 'deprivation' is washed away. It's that simple - isn't it?

The casino will create 2,700 jobs and attract £260m of private investment apparently. But as John Foley points out on Breakingviews, a supercasino is far from being the answer to Manchester's problems - in fact, it's a 'casino operator's dream'. Forget the high rollers, he argues: 'casino operators thrive on the stable, high-margin revenues that come from small-ticket, high-volume slot jockeys. They're more likely to be from lower-income groups - who are in turn more vulnerable to becoming problem gamblers.'

And the people of Manchester might not be too chuffed to know that one reason the committee didn't choose the Millennium Dome was because south-east London was not considered 'the best place to test the social impact of a large casino,' says The Times. We have to wonder why that is exactly.

We're not against gambling at all. We're not particularly concerned with the ins and outs of regulation either, except in as much as it affects the investment case for gaming companies - people have to make their own decisions in life, ultimately, and over-regulation just tends to create opportunities for criminals.

What is irritating is the Government's woolly thinking. The New Labour attitude towards gambling - that it's a quick and painless way to regenerate deprived areas - is very similar to its whole approach to the UK economy. According to them, running an economy is easy it's just a matter of moving money from one place to another.

Let's take the Lottery. Look at all the charities that have benefited from the Lottery, the Government says. But that money hasn't been created it's been funded by what is effectively a tax on people who buy Lottery tickets. Sure, it's a voluntary tax, but it's not wealth creation.

And other forms of gambling are the same. Look at all the jobs that are being created in Manchester, says the Government. Yet they're being funded by taxing people who gamble in the casino. Again, it's a voluntary tax, but again, it's not wealth creation.

And in the case of gambling, the tax falls most heavily on those who can least afford it. So effectively, you're taking money from the poor, and redistributing it to companies, charities and of course the Government which, as always, has its snout firmly in the trough.

The Archbishop of Canterbury isn't someone we'd normally quote in this newsletter, but Rowan Williams has a reasonable point when he says: "I'm very concerned that we can't think of better ways of regenerating deprived areas."

Turning to the stock markets...

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In London, blue-chip shares closed flat, although miners topped the leaderboard as they pulled back from yesterday's losses. The FTSE 100 ended the day 2 points firmer, at 6,242. For a full market report, see: London market close

Elsewhere in Europe, Paris shares were boosted by strong start on Wall street which saw the CAC-40 gain 25 points to close at 5,645. In Frankfurt, the DAX-30 ended the day 62 points higher, at 6,788, with Siemens and E.ON the day's biggest risers.

On Wall Street, stocks closed higher as energy shares were helped by the resurgent oil price, offsetting weak results from 3M Co.. The Dow Jones closed 32 points higher, at 12,523. The tech-heavy Nasdaq was 7 points higher, at 2,448, and the S&P 500 ended the day at 1,428, an 8-point gain.

In Asia, the Nikkei was dragged down by Sony to close 106 points weaker, at 17,383.

Crude oil was trading at $56.77 this morning, whilst Brent spot was at $55.67 in London.

Spot gold had climbed to $646.80 overnight. Silver, meanwhile, was also higher at $13.33/oz.

And India's Tata Steel agreed to acquire steelmaker Corus for £6.2bn today, beating Brazilian rival CSN. The deal marks the largest acquisition ever made by an Indian company. Corus shares had climbed by as much as 7% this morning.

And our two recommended articles for today...

Are UK house prices about to fall?

- Are current UK house prices at unsustainable levels? We at MoneyWeek have thought so for some time. And now Gordon Brown's former adviser, David Miles, thinks so too - he's just predicted a housing bust. But Brian Durrant is not so sure. To find out why he believes it's impossible to call a crash, read: Are UK house prices about to fall?

What does 2007 hold in store for bond markets?

- The Fed's latest decision on US interest rates is due later today. The Onassis team look at how recent rate decisions by the Bank of England and ECB have affected the bond market - and the current state of Treasuries. To find out why the outlook for the bond market is 'very interesting', see: What does 2007 hold in store for bond markets?