The National Audit Office has praised the chancellor's decision to scrap betting taxes in favour of a levy on bookmakers' profits.

A report published on Friday by the spending watchdog said Gordon Brown's move has prompted big firms such as William Hill and Ladbrokes to move accounts back onshore and has created new jobs.

But it cautioned that HM Customs should now address the new risks to government revenue posed by the new technologies such as betting exchanges.

NAO chief Sir John Bourn said the industry had changed since a previous review which led to a move away from taxes on punters' winnings towards a tax on the gross profits of companies.

This change had secured additional revenue of £10 million, said the report.

But Customs underestimated the popularity of new gambling products with low profit margins such as betting exchanges. 

"Consequently, the duty revenue rate has been much lower than expected... even though spending on betting  has been higher than expected in terms of value of bets placed," said the report.

The emergence of betting exchanges, interactive TV gambling, mobile phone gambling, spread betting and internet gaming meant that Customs would need more technology expertise, found the watchdog.

"Customs has made some progress in understanding the new products, and has investigated many e-gaming sites," it said.

"It now needs to refine its risk assessment to take account of these new products as well as any changes arising from the proposed Gambling Bill."

Sir John said: "The introduction of the gross profits tax has also been successful in persuading the largest bookmaking firms to continue to base their core operations in the UK, thereby protecting revenue and industry jobs.

"The challenge for Customs now is to keep pace with and develop its expertise to deal with new forms of electronic gambling.

"It should also complete its work on measuring the tax gap for gambling duties to ensure resources are targeted on the areas of loss."