THE amount people can stake on fixed-odds betting terminals (FOBTs) will be slashed to £2 to reduce the risk of 'gambling-related harm', the Government has announced.

It said the move will cut the risk of potentially large financial losses from the controversial machines as well as harm to both players and wider communities.

The decision goes further than the recommendations of a review carried out by the gambling regulator earlier this year, which recommended the maximum stake for FOBTs should be set at or below £30.

Culture Secretary Matt Hancock said: "When faced with the choice of halfway measures or doing everything we can to protect vulnerable people, we have chosen to take a stand.

"These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all."

The decision is set to please campaigners but will come as a blow to bookmakers, which have warned it would cost betting shop jobs across the country.

FOBTs - dubbed the 'crack cocaine' of gambling - can lead to punters placing bets of up to £100 every 20 seconds.

Tracey Crouch, Minister for Sport and Civil Society, said they can 'devastate individuals' lives, families and communities'.

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But Britain's biggest bookies have now warned over potential betting shop closures and job losses.

Shares were initially sent slumping across the sector as the big players estimated the extent of lost revenues and earnings, although some of the stock losses were later clawed back.

William Hill, which makes more than half of its retail revenues from FOBTs, said the 'unprecedented' decision could see around 900 of its betting shops become loss-making, with a proportion at risk of closure after the new £2 limit comes into force.

The group said the stake cut could reduce annual earnings by between £70 million and £100 million and estimates it will cut its total gaming net revenues by as much as 45%.

It comes as the Association of British Bookmakers predicted more than 4,000 shops could close across the entire sector, with the loss of 21,000 jobs.

Philip Bowcock, chief executive of William Hill, said: "The Government has handed us a tough challenge today and it will take some time for the full impact to be understood, for our business, the wider high street and key partners like horse racing.

"We will continue to evolve our retail business in order to adapt to this change and we will support our colleagues as best we can."

Paddy Power Betfair welcomed the move to help improve the sector's image, but warned it could hit its gaming revenues by between £35 million and £46 million.

The hit to its profits could be offset by factors including gamblers switching to other games, as well as benefits from less competition as rivals are forced to merge, it said.

Peter Jackson, Paddy Power Betfair's chief executive, said: "We have previously highlighted our concern that the wider gambling industry has suffered reputational damage as a result of the widespread unease over stake limits on gaming machines.

"We welcome, therefore, the significant intervention by the Government today, and believe this is a positive development for the long-term sustainability of the industry."

The age limit for playing National Lottery games will be reviewed under the next licence competition.