The maximum stake on the controversial fixed-odds betting terminals (FOBTs) will be cut from £100 to £2, the government has announced.
The move follows a consultation about FOBTs – branded the “crack cocaine of gambling" by critics – and comes as a major blow to bookmakers, with Preston alone having 24 betting shops and 87 FOBTs.
The decision goes further than the recommendations of a review carried out by the gambling regulator earlier this year, which recommended the maximum stake for FOBTs should be set at or below £30.
Terry Kilgariff, a member of Preston’s Gamblers Anonymous and a self-titled compulsive gambler of 40 years, said: “We weren’t expecting the £2 limit so we are very pleased. It will have a definite effect on helping some of the people coming through our doors.
"It wont stop the problem but will certainly make it more manageable for the people getting into dire straits."
Simon Rigby, owner of Preston-based bookmakers BetSid which also has shops in Blackpool and Chorley, said: "This was much harsher than we were expecting. It will hit employment locally.
"We have eight shops having opened, two a year for the last few years, but suspended this programme when the review was announced as a precaution.
"We will think long and hard before opening further shops.
"All our current shops we see as long term investments and have no plans to close any and have already reassured our shop and Head Office staff of this.
"This is not helpful but I do not know of any Lancastrians who were betting £100 every 20 seconds but dropping the limit so much runs the risk of driving people online where this is no steadying influence for shop staff or benefit to the local economy.
"Bet Sid recently took the UK distributorship for Phoenix Darts – part of the Soft Tip darts revolution which is entertainment only (i.e. not betting) and we are also look at re thinking Bingo as Bet Sid is interested in the wider leisure market as well had traditional bookmaking.
"This diversification looks very wise with this announcement."
Preston's MP Sir Mark Hendrick has campaigned for action to be taken against FOBTs since 2014.
Mr Hendrick said: "The move to £2 is welcome but is not a solution to the problem.
"It wont affect people at the poorer end of society who aren't well off and will still be putting £2 in every 20 seconds.
"What may seem to be modest amounts could lead to families going without food on their table."
The Association of British Bookmakers said that the decision "will have far-reaching implications for betting shops on the high street".
They added that they expect more than 4,000 shops to close and 21,000 colleagues to lose their jobs.
A spokesman said: "The independent expert advice warned that this would simply shift people, the majority of whom gamble responsibly, to alternative forms of gambling where there is less chance of human interaction and its impact on problem gambling levels is far from certain.
"As the industry adjusts its business model, those shops that do survive will continue to provide a safe place to gamble with staff interaction and industry leading responsible gambling measures and support British sport."
Member of Preston's Gamblers Anonymous, Terry Kilgariff, said that since last November the group has had "30 to 40 new members, with the majority being because of online gambling".
The 60-year-old, who has tried to take his life twice in the last four years as a result of his personal addiction, added: " They are getting younger and younger too with one lad coming last week who was only 17-years-old.
"It's more accessible and taking over because it is 24/7, 365 days a year."
Terry continued: "We are also seeing a lot more women as a result. Whereas a year ago we had perhaps a couple we have had six or seven this year."
Sir Mark Hendrick MP raised concern over tackling online gambling. He said the servers are "very often outside the country and not under Westminster's legal jurisdiction".
He added: "It's very very difficult to control this."
"You can get anything banned in this country if you whine for long enough"
Christopher Snowdon, head of lifestyle economics at the Institute of Economic Affairs, said: "Today's announcement shows that you can get anything banned in this country if you whine for long enough.
"Make no mistake, reducing the stake to £2 amounts to a ban. The machines will be taken out of bookmakers and players will move online where there are no limits on stakes or prizes.
"Hundreds of bookmakers will close, thousands of jobs will be lost and the horse-racing industry will lose millions of pounds in subsidies. Taxpayers will then have to fork out £400 million to fill the gap in the Treasury's balance sheet.
"For what? To deal with a moral panic over something that accounts for just 14% of Britain's gambling expenditure. There has never been any evidence to support this campaign. The Government is weak and cowardly to have given in to it."
Shares in gambling firms tumbled following the stake cut decision.
William Hill fell five per cent in the FTSE 250 Index and FTSE 100-listed Paddy Power Betfair fell two per cent.
Fellow gaming group 888 Holdings dropped six per cent, with GVC Holdings off four per cent and Playtech two per cent lower.
Philip Bowcock, chief executive of William Hill, said: ""The Government has handed us a tough challenge today and it will take some time for the full impact to be understood, for our business, the wider high street and key partners like horseracing."
Bookmaker William Hill warned the decision could see around 900 of its betting shops become loss-making, with a "proportion" at risk of closure shortly after the new £2 limit comes into effect.