The maximum permitted stake on controversial fixed-odds betting terminals (FOBTs) will be cut to £2 under new rules unveiled by the government.
At present, gamblers can bet up to £100 every 20 seconds on electronic casino games, which have been described as the "crack cocaine" of gambling.
Sports Minister Tracey Crouch said slashing the stake to £2 "will reduce harm for the most vulnerable".
But bookmakers have warned it could lead to thousands of outlets closing.
William Hill, which generates just over half its retail revenues from FOBTs, described the government's decision as "unprecedented", and said the new regulations could leave the company at risk of a foreign takeover and put 20,000 British jobs in jeopardy.
The company said its full-year operating profit could fall by between £70m and £100m.
GVC Holdings, which owns Ladbrokes, said it expected profit to be slashed by about £160m in the first full year that the £2 limit is in force.
Shares in William Hill and GVC Holding both fell following the news.
Ms Crouch said: "We recognise the potential impact of this change for betting shops which depend on (FOBT) revenues, but also that this is an industry that is innovative and able to adapt to changes."
Gambling safety campaigners reacted to the government’s decision with delight, according to the Financial Times.
Fairer Gambling, a group led by 67-year-old ex-professional poker player Derek Webb and former gambling addict Matt Zarb-Cousin, 27, said:
“Allowing high stakes roulette machines in such an easily accessible environment has had disastrous consequences, impacting levels of gambling-related harm and crime.”