A clampdown on betting machines labelled the ‘crack cocaine of gambling’ has been shelved following an intervention by Chancellor Philip Hammond.

Last year, ministers ordered a review of fixed-odds betting terminals, which are linked to addiction, family breakdown, debt and money laundering.

Gamblers can wager £100 every 20 seconds on machines featuring touchscreen, casino-style games such as roulette and bingo. They were responsible for 96 per cent of all losses over £1,000 in betting shops and arcades.

The Department for Culture, Media and Sport wants to reduce the maximum stake on the machines to as little as £2.

Last year, ministers ordered a review of fixed-odds betting terminals, which are linked to addiction, family breakdown, debt and money laundering. Pictured: A stock image of a gambling machine

But the Treasury opposes the drastic cut, warning it could slash tax receipts.

About £1.8billion is wagered on the terminals every year, contributing more than £400million to the Exchequer.

A Whitehall source said the Treasury fears that cutting the stake to £2 would be ‘financially crippling’.

Since the Government lost its majority at the General Election in June, several other revenue-raising measures have been abandoned, including a pledge to cut free school meals and winter fuel payments and reforms to social care.

Government borrowing has also risen this year, putting pressure on Mr Hammond to keep the purse strings tight.

A Whitehall source said the Treasury fears that cutting the stake to £2 would be ‘financially crippling’. Pictured: Chancellor Philip Hammond

But campaigners warned last night that if the stakes were not slashed, the high cost to society of crime and addiction would continue.

Labour MP Carolyn Harris, chairman of the all-party parliamentary group on fixed-odds betting terminals (FOBTs), said: ‘The Treasury should look at the unsustainable cost to the public purse of dealing with the problems of crime, addiction and social harm on Britain’s high streets because of the exorbitant stakes on FOBTs.

‘It is morally bankrupt to allow this situation to go on because of a misunderstanding of the economics of FOBTs. Britain will be financially better off if we take action on these machines.’ DUP MP Jim Shannon added: ‘We will continue to ask for restrictions on the stakes for these machines. It should be £2, or £5 at the most. Some people are betting large amounts of money and becoming completely addicted to them.’

Gamblers can wager £100 every 20 seconds on machines featuring touchscreen, casino-style games such as roulette and bingo

Ministers believe several Tory MPs would not back a cut in the maximum stake, making it difficult to get the measure through Parliament. The issue is complicated by the fact that the DUP, whose MPs give the Government its majority, would push for the smallest stake.

MPs say FOBTs are disproportionately found in poorer parts of the country.

Figures published in May revealed the shocking scale of the losses from FOBTs.

On more than 650 occasions gamblers have blown more than £5,000 – about a fifth of the average salary. And players lost £1,000 on 233,071 occasions.

The Mail has led the way in highlighting the harm caused by the machines, demanding action to protect the vulnerable. The total amount lost on FOBTs has soared by 73 per cent since 2009, despite the number of machines rising by only 9 per cent to 34,388 over the same period.

Jason Frost, of Bacta, the arcade gaming industry association, said: ‘Fixed-odds betting terminals are a hardcore form of gambling, entirely unsuitable for everyday high street venues.

‘They endanger consumers, foster a culture of violence and aggression, and undermine the whole amusement industry’s work to create a socially responsible environment for gaming.'