A new row over fixed-odds betting has erupted, amid claims that potential conflicts of interest are distorting parliamentary debate on the issue.

Last week, MPs debated proposed reforms that include reducing the stakes on the electronic games of roulette and blackjack played on fixed-odds betting terminals (FOBTs) in betting shops. The terminals are a huge source of profit for bookmakers but have been described as the “crack cocaine of gambling” because of their addictive qualities.

Quick guide What you need to know about FOBTs Show Hide What are FOBTs? Fixed-odds betting terminals (FOBTs) are machines, found largely in bookmakers and betting shops, that allow customers to stake up to £100 every 20 seconds on digital versions of games such as roulette. How many are there? The UK has 33,611 FOBTs, each of which take more than £53,000 from gamblers per year. Why are they considered a problem? Critics of FOBTs say they are particularly addictive, allow gamblers to rack up huge losses within a few hours, and are concentrated in deprived areas. They have also been linked to money laundering.

A document leaked prior to the debate revealed that numerous questions drafted for the MPs were pushing arguments made by lobbyists for the bookmakers. Some highlighted the steps betting shops are taking to tackle problem gambling. Others stressed the importance of the shops as employers, or urged tougher action against online gambling sites that are eating into the shops’ profits. Versions of many of the questions made their way into the debate. The revelation has prompted fears that some MPs – especially those who have benefited from lavish hospitality provided by the big bookmakers – could be overly influenced.

“I have been campaigning against fixed-odds betting terminals for many years now, and everyone who has been involved in this campaign is well aware that the gambling lobby is a very powerful and well-resourced organisation with friends in parliament who are keen to protect their interests and profits,” said Labour MP David Lammy. “The damage caused by these machines has been tolerated for far too long, aided and abetted by this lobbying.”

About 34,000 FOBTs are currently in operation in the UK, generating about £1.4bn in profits every year for bookmakers, who are now preparing lengthy responses to the government’s call for evidence, following its announcement of a review of gambling machines last week.

High stakes battle on the high street: Newham's fight against FOBTs Read more

“In my own constituency, the growth and proliferation of bookies on Tottenham High Road has been funded by the vast profits pulled in from FOBTs, with no regard shown for the misery and broken lives that they have left behind in my community,” Lammy said. “It is therefore deeply disappointing that gambling companies and their supporters are still organising in this cynical manner, and in my view the government needs to be clear that they care more about the huge harm caused by FOBTs than the profits of big business.”

There are also fears that a limited clampdown on bookmakers’ terminals may simply drive business elsewhere. Officials at the Department for Digital, Culture, Media and Sport (DCMS) privately acknowledge that limiting proposals to betting shops may favour amusement arcades, bingo halls and pub chains that have vocally lobbied against betting shop terminals.

Restrictions on stake size alone fail to adequately address concerns in relation to cost of play Dr Jonathan Parke, gambling expert

The arcades, bingo halls and pubs fund the all-party parliamentary group that has led the fight to clamp down on betting shop terminals. But they have their own types of gaming terminal that fall under what the government terms a B3 licence, on which punters can lose almost as much money as playing those in betting shops.

A report commissioned by the Responsible Gambling Trust (GambleAware), shared with the Observer, suggests punters can lose an average of about £230 an hour on the B3 terminals, compared with just £9.72 an hour on the betting shop machines if the maximum stake was cut from the current £100 to just £2, as the all-party parliamentary group demands.

“Restrictions on stake size alone fail to adequately address concerns in relation to cost of play,” said the report’s author, Dr Jonathan Parke, an expert on gambling behaviour. “A stake-only approach ignores the role of game speed, game volatility and return-to-player.”

Data provided by GambleAware – which receives money from the bookmakers – indicates that more than 2.5bn bets are placed on amusement arcade, bingo hall and pub machines every year, compared with 1.9m bets on the betting shop terminals.

In a submission to the government, the campaign group Gambling Reform & Society Perception said: “Through accounts given by players, we are increasingly aware that B3 machine play is a significant contributor to problem gambling, especially among those playing in bingo halls.”

Parke said FOBTs were configured in a way that made them one of the highest risk gambling products available in Britain, but added: “Even if campaigners are successful in securing a £2 stake through the DCMS consultation, we will still have gaming machines on the high street where people can lose hundreds of pounds an hour.”

Lammy said any reforms should also acknowledge the emergence of social media.

“Gambling regulation has not kept up with modern technology, particularly the rapidly growing online casino gambling sector, and also the exploitative marketing ploys used by gambling companies and affiliates who sign up users through introductory offers promoted on social media.”