The owner of Betfair and Paddy Power has warned that Rachel Reeves’s tax raid on the gambling industry will cost it $574m (£434m).

Flutter Entertainment, the world’s largest online betting firm, said it expected higher taxes to cost it $860m over the next two years, but that some of the impact would be mitigated by cutting spending in areas such as marketing. After factoring this in, the company said profits were expected to fall by $574m over the period.

The Chancellor on Wednesday announced a tax on online casinos would nearly double from 21pc to 40pc in April. General betting duty, which is levied on other forms of sports betting excluding horse racing, will rise from 15pc to 25pc.

Kevin Harrington, Flutter’s chief executive for the UK and Ireland, described the tax rises as a “very disappointing outcome” that will have a “significant adverse impact on our industry”.

He said: “The Chancellor rightly wants to address harm, but these changes will hand a big win to illegal, unlicensed gambling operators who will become more competitive overnight. These black-market operators don’t pay tax and don’t invest in safer gambling.”

Rival Entain, which owns Coral and Ladbrokes, said it expected a £350m hit over the next two years.

Stella David, the Entain chief executive, said: “We are deeply disappointed by [the] decision to punitively increase UK gambling taxes, putting at risk an industry which already contributes £7bn annually to the UK economy and supports over 100,000 jobs across the country.”

Both Entain and Flutter, which moved their stock market listing from London to New York last year, said they expected to gain market share as smaller operators are forced to withdraw from the UK market.

Shares in Rank Group, the owner of Grosvenor Casinos and Mecca Bingo, plunged 9pc on Thursday to the bottom of the FTSE 250 after it warned profits would fall by around £40m. Playtech, which makes technology for gambling companies, said it expected an impact of up to high-teens millions of euros.

Analysts said the total impact across the UK gambling sector stood at around £750m.

Chris Beauchamp, the chief market analyst at IG, said: “The tax makes for good copy in Reeves’s attempt to woo Labour MPs to continue backing her and the PM and is a huge nod in the direction of those calling for higher taxes on the industry, but ultimately the risk is that operations will be curtailed or cut back, hitting tax revenues in other ways.

“While there was differentiation between parts of the industry, between online casinos and bingo halls, the impression remains that this is a Budget designed to squeeze as much out of business as possible.”

Ms Reeves unveiled a host of “sin” taxes in the Budget, which critics have branded a tax on fun.

Shares in Imperial Brands, the tobacco giant behind Davidoff and Gauloises cigarettes, fell more than 3pc on Thursday after the Chancellor confirmed that tobacco duty will increase above inflation.

Retailers have also been hit by an extension of the existing sugar tax to include pre-packaged milkshakes and lattes.

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