Betting shops will now be a much safer environment for customers and staff'.
Users can now gamble away up to £100 every 20 seconds on the machines, which campaigners say are dangerously addictive and have been dubbed the "crack cocaine of gambling".
The Clwyd South Labour MP, who is a member of the All Party Parliamentary Group for action on Fixed Odds Betting Terminals, has questioned Government Ministers in the House of Commons about gambling machines where £100 can be lost in a single stake.
In March, the Government was advised by the Gambling Commission that it should limit the stakes to between £2 and £30, and it has opted for the "lowest end" of this range, citing that there are "consistently high rates of problem gamblers among players of these machines".
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In a statement, William Hill acknowledged that around 70% of its gaming machine revenue this year had been generated by stakes in excess of £2 and that as many as 900 of its shops (38% of all its retail space) could become "loss-making" after the changes are implemented.
The betting terminals, previously described as the "crack cocaine of gambling", have been controversial for the huge losses that can be built up in a short space of time. I am very glad the Government agrees that a £2 stake is an essential part of the solution.
"It is a pity they took quite this long to come to a decision, but each and every move is welcome if it means we do something to tackle the issue of problem gambling which causes difficulties and hardships for so many families".
However, the move has prompted criticism from gambling companies, which have claimed the move puts thousands of jobs and hundreds of betting shops at risk.
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The government said the Gambling Commission would also toughen up protections around online gambling such as stronger age verification rules and proposals that require operators to set limits on gamblers' spending until affordability checks have been conducted.
Despite warnings from a number of major gambling operators that such changes would lead to significant job losses across the industry, Tracey Crouch, Minister for Sport and Civil Society, said that new rules will now be put in place.
It also laid out plans for a major multi-million pound advertising campaign promoting responsible gambling that will be supported by the industry.
Elsewhere, Public Health England will review evidence relating to public health harms of gambling, while, as part of the next licence competition, the age limit for playing National Lottery games will be reviewed.
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Changes to the stake will need to be brought through leglislation and will need to be approved by parliament.