announced last night.

And she warned owners and operators of hi-tech slot machines that it was on the cards that the gambling had to stop.

But -- in a compromise deal -- existing machines are likely to be allowed to see out their lifespan, according to top lawyer Julian Hall.

And Finance Minister Eugene Cox said top politicians would now tour pubs and clubs to examine the machines in person.

Ms Smith said after the meeting: "I have told operators that Government has taken a policy position on gambling that, except for all those games traditionally allowed, it will not be allowed.

"And I said that we would, in future, no longer allow gaming machines or break out cards.'' Ms Smith said, however, that new legislation would have to be introduced -- and that, in the meantime, the electronic blackjack and poker machines would continue dealing cards.

She added: "We have informed the people concerned of our decision and we will now enter a period of fact-finding and consultation.

"Following that, we will determine what next steps we need to take -- the second step will be a constructive and investigative process prior to us introducing any legislation.'' And the Premier insisted: "I'm not going to pre-judge anything.'' Flanagan's chief Tommy Gallagher, chairman of the restaurants and nightclubs division of the Chamber of Commerce, earlier this week warned that banning the machines could damage businesses already on the ropes due to the decline in tourism -- and might even lead to closures in some cases.

He said at the end of the Bermuda College meeting that the Premier had been "inclusive and concerned.'' He added: "She was clearly concerned about the impact in terms of the operator.

"She recognises that there are various benefits to the operators and is in the process of investigating this further to come to a reasonable method of treating with the issues of gaming machines.'' And -- when asked if the machines would eventually disappear from the Bermuda scene -- he said: "I would imagine so, eventually.'' But Mr. Gallagher added: "Even though this was obviously discussed in Cabinet and a policy decision was made, it was done on a face-to-face basis with the operators to try and minimise any economic impact and that's commendable.'' Mr. Hall represents two of the three importers of the machines -- who he declined to name -- and, through a legal indemnity deal, most of the operators.

He said that the previous Government had adopted a "deafening silence'' on the hi-tech card-playing machines -- as well as allowing their importation and taking a tax cut of "tens of thousands of dollars'' on them.

Break-out cards require no skill, just a random selection of a card where strips are peeled off to see if it is a winning hand, and are probably illegal under existing law.

But Mr. Hall insisted that an outright ban on the blackjack and poker machines would lead to a blizzard of legal actions demanding compensation for lost investment in property and earnings.

He said: "It had to be a compromise -- failing that, the Government would have to pay a substantial amount of compensation out of taxpayers' pockets.'' Government bans gambling terminals "I expect to see a moratorium on importation and a moratorium on expansion -- but it was made clear that they would not stop these machines from operating.'' And Mr. Hall said: "There was a clear indication that the Government might tend to prefer a longer-term phase-out of the machines, which the Premier claims have a limited lifespan.

"In practical terms, these machines will continue in use and it is not Government policy to encourage Police enforcement of what they think is the legal position.'' And he added: "Policy is policy -- but it's not law and it's not illegal to import these machines, that much is agreed.'' And he predicted any Government was swimming against the tide in trying to outlaw gambling altogether -- especially with Internet gaming on the increase.

Mr. Hall said: "In due course a lobby can grow which will demonstrate that some form of well-regulated gaming will be in Bermuda's best interests and won't necessarily mean the Island will go to hell in a handbasket.'' GOVERNMENT GVT