UK gambling firms saw their shares dive on Monday after MPs called for a crackdown on online casinos that would include a ban on betting with a credit card and a £2 limit on stakes.

Ladbrokes owner GVC plunged 10.6 per cent while William Hill fell 12.3 per cent. Flutter Entertainment, which owns Paddy Power and Betfair, was down 3 per cent.

In a report published on Monday, the All Party Parliamentary Group (APPG) for Gambling Related Harm echoed Labour’s calls for laws introduced under Tony Blair’s government to be torn up.

The industry has ballooned in the UK since controls were relaxed by the 2005 Gambling Act. But with that growth has come increasing concerns about gambling addiction and related social problems.

The cross-party group said “root-and-branch” reform of online gambling was now needed to protect vulnerable people, including more responsible advertising and restrictions on “VIP accounts”.

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Several companies have been using incentives and rewards, such as free trips to the races, in order to keep gamblers hooked.

The APPG wants firms to introduce mandatory affordability checks for all customers to ensure that they are betting within their means.

Of particular concern for online operators will be the call to reduce stakes from £100 per spin to £2 – mirroring a similar change introduced for fixed-odds betting terminals (FOBTs) in bookmakers earlier this year.

The measure would leave a huge dent in the multibillion-pound profits of big gambling firms and would leave land-based casinos as the only venues in which high-stakes gaming could take place in the UK.

William Hill and Ladbrokes are among the firms which have already been hardest hit by the reduction in FOBT stakes.

Campaigners welcomed some of the changes but questioned whether a blanket £2 limit for all types of gambling was the best approach.

Adam Bradford, of the Safer Online Gambling Group, agreed that banning credit card gambling would be an important improvement

“It is also sickening that there is a lack of treatment available for the hundreds of thousands of addicts in this country.

“We need to improve access to treatment urgently. I also agree that firms need to be smarter about checking whether a player’s gambling is affordable.”

However, he labelled the £2 stake limit as “preposterous”.

He added: “No one product is the same and without robust evidence, I feel it damages the group’s credibility to introduce such a punitive move which would only achieve one objective – to destabilise the industry to the point of its own demise.

“This would unduly cost many thousands more jobs and spoil the enjoyment of the rest of the population who do enjoy gambling.”

The report also described industry regulator the Gambling Commission as “not fit for purpose”.

Conservative MP Iain Duncan Smith, who is part of the APPG, urged the Gambling Commission to look at the online sector in greater depth.

He said: “For too long, online gambling operators have exploited vulnerable gamblers to little or no retribution from the regulator.”

“We are disappointed that this report has been released before we have been given the chance to give evidence to the APPG,” a Gambling Commission spokesperson said in a statement released to iGamingBusiness.com.

The APPG has faced criticism for its focus on specific products rather than the overall problem of gambling-related harm, which experts agree is not specific to particular types of gambling.

The group is funded by casinos, bingo clubs and gambling arcades, all of whom compete with online providers while themselves selling different types of addictive products.