Gambling shares fell sharply yesterday as fears grew that Labour in the UK could hit the industry with a £3bn tax raid, writes Jessica Clark.

More than £2bn was wiped off the value of London-listed gambling firms amid reports Rachel Reeves is plotting a crackdown on the sector.

The Chancellor is scrambling to raise money to make her Budget numbers add up.

Among the options she is said to be considering is a doubling of the duty on high street bookies to 30pc and increasing the online casino gaming levy to 50pc.

Shares in Flutter, which owns Betfair and Paddy Power, fell 6pc over fears that a spiralling tax bill would wipe out industry profits.

Ladbrokes-owner Entain saw shares drop 8pc and Evoke, which owns William Hill and 888, tumbled 14.4pc.

Rank Group, which operates the Grosvenor Casinos and Mecca bingo chains, fell 3.2pc.

The Guardian last week reported the proposals could raise £2.9bn for the UK government next year and up to £3.4bn by the end of the decade amid concerns that problem gambling is on the rise.

City analysts warned the hike would decimate gambling profits, raise prices for customers and increase the risk of illegal black-market operators emerging.

Analysts at Jefferies said such a move would “all but wipe out bookmaker profitability in the UK”.

Russ Mould, investment director at investment platform AJ Bell, said: “The betting industry will argue higher taxes could lead to an increase in illegal black-market gambling and ultimately firms may well pass on any extra costs they incur to punters, potentially doing more harm.”