THE State-run Lottery has made gamblers of us all. So it comes as a surprise to recall how the establishment frowned on betting until relatively recently. Tomorrow marks the 40th anniversary of the legalisation of betting shops. This change wasn't as revolutionary as it sounds. In 1850, there were 400 betting shops operating quite legally in London alone.

The business had emerged in the early 19th century when popular interest in horse racing was beginning to grow. On-course and credit bookmakers were well-established, but the latter were too concerned with 'gentlemen' clients to worry about the ordinary punter.

But there were many entrepreneurs willing to take the tanners and pennies off the smaller gambler.

As the shops became more profitable, the criminal fraternity muscled in and pushed out smaller bookmakers. In one notorious incident, a betting shop in London vanished overnight, owing punters £25,000.

In 1853, a law came in to close down the betting shops. As a result, an illegal cash betting industry sprang up with bookies' runners much in evidence.

One of countless illegal bookmakers was Sarah Ellen Langstaff. When Yesterday Once More looked back on the Shirley Shop in Borougbridge Road last year, owner Brian Douglass revealed that his great grandmother Sarah Ellen ran an illegal betting operation in the back of a Walmgate shop.

Every so often, he said, "the police would take her away. She would be fined a few quid and she would get taken back".

Visiting the betting shop remained an illicit activity for more than 100 years. Then in September 1960, the Home Office announced that betting shops would be allowed to open from May 1, 1961. "Today, off-the-course cash betting became legal - and you could walk into one of York's betting shops without the customary furtive glance over the shoulder," the Evening Press reported on the big day.

The previous week, the York Betting Licensing Committee had granted all 56 applications that came before it, but some didn't open on the day because planning permission was also needed.

"Ironically enough, some premises which have been operating illegally for years will have to remain closed all this week due to making their applications just too late," the Press said.

The report went on: "The interiors of the betting shops throughout the city vary considerably. Some have a Post Office or bank-like flavour to them, with clerks waiting behind grilles to receive customers' bets and issue tickets as receipts.

"Others are little more than a room with a rough table separating the bookmaker and his staff from the clients.

"To the betting shop 'regulars', the people who have been backing their fancies for cash, illegally, for years, the new regulations are about as welcome as a string of losing favourites.

"For they had become the most mollycoddled generation of punters ever to finger a betting slip. They had chairs provided, sporting papers, advanced news of the betting chalked up for them straight from the course, commentaries on the racing, and a swift pay-out of winning bets."

The 1961 law brought about a stark new world. Although the government had felt compelled to legalise the activity, it did so with a frown of distaste. The list of conditions restricting bookies was long: no TV; no lingering - punters had to place their bet and leave; no refreshments; and windows had to be screened so passers-by were not affronted by the sight of this unseemly business.

Four betting shops were owned by John Clout, who went on to be leader of North Yorkshire County Council. At the time betting shops were legitimised, he was chairman of the York and District SP Bookmakers' Association.

"It will, no doubt, take some time for the non-betting public to realise that established bookmakers are perfectly respectable business people who cater for the needs of a large percentage of our population," he told the Evening Press in 1961.

Another man who knew the business inside out was Baz Oxtoby. His dad Henry owned a betting shop on Shipton Street both before and after legalisation.

"It was small and smoky," he recalled. "But weren't they all?

"They were very different to shops today. You had to chalk the runners up every morning.

"Obviously I wasn't working then."

Not officially, anyway. But Mr Oxtoby does confess to being the school bookie during his time at Archbishop Holgate's. Usually he came up winning, except when a mate from the next class had sixpence on Charlottown to win the 1966 Derby, and it did.

"Mental arithmetic was always my strong subject at school. I think I was always really going to follow my dad.

"I'm not really fond of horse-racing. A lot of people believe that bookies need to know all there is to know about horse racing. But I say we just rely on other people not knowing as much as they think they do."

In those early days, there was plenty of competition. Mr Oxtoby, 51, can remember names such as John Graham's on Burton Stone Lane, as well as Mr Clout. "There was no collaboration at all in those days," said Mr Oxtoby. "Your customers were your customers. There was nothing like early morning prices, so there wasn't anything to tempt them anywhere else."

The early restrictions made little sense. "You couldn't have a television. You could watch racing in the pub over the road but you couldn't watch it in a betting shop."

Commentary on the races was relayed over loudspeakers by the company Extel, short for Exchange Telegraph.

Placing a bet was very low-tech. The clerk wrote it down on two pieces of paper, one for the bookie, one for the customer. "There was no security in those days. You just trusted people."

After working for his dad, Mr Oxtoby became the first manager of Coral's in Stonebow, York. He set up on his own in 1985, moving the business to Clifton more recently. He retired from bookmaking last year; his wife Carol runs Clifton View Guest House.

The advent of computerisation was the biggest revolution to hit betting shops, he said.

And the introduction of accumulators, where gamblers can win huge sums with a low stake by predicting a series of wins, gave him the odd heart murmur down the years. One punter "once threatened to take £30,000 out. That was a bit of a knee trembler".

The golden era of the independent betting shop may have passed, he said. Competition from the major chains and the Internet is making it more difficult for the smaller man.

But at least punters can now sit and watch the races in comfort.