By Rahul B and Ben Martin
LONDON (Reuters) - The maximum stake on gambling machines in British betting shops could be sharply cut in response to concerns that the terminals -- a key source of revenue for bookmakers -- fuel addiction.
The top stake could be cut from 100 pounds to between 50 pounds and as little as 2 pounds, the government said on Tuesday, starting a 12-week consultation period.
The wide range of options left on the table sets the scene for a battle between the gambling industry and critics who are concerned about easy access to fixed odds betting terminals (FOBTs) in betting shops.
"Given the strong evidence and public concerns about the risks of high stakes gaming machines on the high street, we are convinced of the need for action," said Gambling Minister Tracey Crouch.
"That is why today we have set out a package of proposals to ensure all consumers and wider communities are protected," she added.
However, shares in London-listed gambling companies such as William Hill (L:WMH) and Ladbrokes Coral (L:LCL) gained 2.7 percent and 1.3 percent in early trade as the market took the upper 50 pound limit as benign for companies.
Settling the maximum stake is seen as likely to set off a further round of dealmaking in the gambling industry.
A FOBT is a touch screen machine that allows players to bet on the outcome of various games such as roulette.
The machines have helped to keep betting shops going when many younger gamblers have switched to betting on sports events using their smartphones or tablets.
MONEY SPINNER
Ladbrokes Coral -- which de-throned William Hill as the country's largest bookmaker after a merger last year -- made about 800 million pounds of revenue from gaming machines in 2016.
Ladbrokes said it would take active part in providing evidence during the consultation process and was hoping that the commitment of final outcome being evidence-led will remain in place.
William Hill said that it was pleased that the government recognised the industry's contribution to the wider economy.
"We are concerned that severe stake cuts remain an option and will play a full part in the consultation process to ensure an evidence based outcome," a William Hill spokesman said.
The government also said it would tighten guidelines on advertising to ensure that ads do not encourage impulsive or socially irresponsible gambling and gambling content cannot be accessed by children through social media.
The opposition Labour Party said the proposals did not go far enough.
"Britain is suffering from a hidden epidemic of gambling addiction," said Labour lawmaker Tom Watson.
"Labour is committed to reducing the maximum stake for FOBTs to 2 pounds a spin and will ban gambling company advertising on football shirts."
Others in the wider gambling industry lamented the failure to come up with a clear ruling.
"Yet again it doesn't give clarity," Brian Mattingley, chairman of online gambling company 888 which does not run any betting shops, told Reuters.
"I’m not surprised that the share prices have reacted positively because at least the draconian [£2 proposal] is not the only option."