Opposition parties attacked the measures, saying they would trigger a growth in people addicted to gambling. But Sports Minister Gerry Sutcliffe said the act provided "unprecedented powers" of control and protection for children and vulnerable gamblers.
All gaming operators based in Britain will be required to show they meet strict conditions to win a licence from the new watchdog - the Gambling Commission - to trade. Failing to comply with conditions such as prominently displaying information about responsible gambling, will result in steep fines and even prosecution.
The act overhauls legislation dating from 1845 and covers all forms of gambling from high-end casinos to arcades. The Gambling Act allows the creation of more regional casinos, and bigger slot machine payouts. The National Lottery and spread betting will continue to be regulated by separate bodies.
British-based online gaming sites will be governed by the regulator. But with betting duty set at 15%, doubts have been cast as to how many firms based offshore will relocate.
The Conservative spokesman on gambling Tobias Ellwood questioned whether the act "has the teeth" to manage new types of gambling such as internet gambling and games that could be sent to children’s mobile phones. He told BBC Radio 4’s Today programme: "Many online gambling companies will be advertising on our TVs, probably from 9pm tonight, but will already have moved to Gibraltar."
The Liberal Democrat culture spokesman, Don Foster, said the government had "failed at every opportunity" to bring internet gambling companies onshore where they would pay tax and face proper regulation. But Peter Dean, chairman of the Gambling Commission, said the act aims to tighten industry regulation and ensure the young and vulnerable are not exploited.
The act will see 6,000 fruit machines in premises such as takeaway food shops and mini cab offices, where children could play with them unsupervised, be phased out by 2009.
Bingo halls will also no longer have to return all stakes as prize money. They will now be able to keep some money behind to offer as rollover prizes. A top prize of at least £1 million has already been announced as a result of the new laws.
But the biggest change is the lifting of the ban on TV and radio adverts, which allows gambling emporiums to reach bigger audiences. They will be subject to a code of practice, including a 2100 watershed.
The new act has attracted criticism from charities including the Salvation Army which said it feared the changes would "normalise" an addictive activity. "The results can be devastating on the individual, their friends, family, and on society," a spokesman said.
The new ads will carry the address of a website promoting responsible gambling.
Charity GamCare, which runs the only national helpline for problem gamblers, said the government "missed an opportunity" and should have insisted its telephone number was also included. The new laws come two months after plans for a super-casino in Manchester were put on hold due concerns over its impact.