Britain’s biggest gambling companies lost more than £4bn in value amid fears of a tax raid on the sector in the next Budget.

On Friday, Flutter, the gambling giant which runs Paddy Power in the UK and Entain, which owns Ladbrokes and Coral, saw shares crater over fears Rachel Reeves will raise taxes in the autumn. William Hill owner Evoke also saw shares slump.

The decline followed reports that a rise in taxes on the gambling sector was “near-guaranteed” as Ms Reeves battles to plug a black hole in the economy worth as much as £50bn.

Following the report, London-listed Evoke saw £23m wiped off shares while Entain lost about £37m and Flutter – which was once listed in London but now trades in New York – lost more than $5.7bn (£4.2bn) in value.

A tax raid on the gambling sector has taken on increasing urgency in recent days after Gordon Brown, the former chancellor, said higher taxes should be imposed to help address child poverty in the UK.

On Wednesday, Mr Brown said: “We now know that taxing gambling more fairly would fully fund the first crucial step in the war we must wage against child poverty: ending the two-child limit and lifting the benefit cap.

“There are many reasons why the highly profitable betting and gaming industry should pay a fairer share towards the cost of UK’s unmet needs.”

He cited a report from the Institute for Public Policy Research (IPPR) think tank, which claimed that Ms Reeves could raise as much as £3.2bn by reforming the way gambling firms are taxed.

The IPPR said tax rises should be targeted at the most profitable parts of the industry, such as online casinos, slot machines and high-stakes betting.

Ms Reeves is under pressure to raise taxes amid slowing growth and weakness in the jobs market.

The National Institute of Economic and Social Research (Niesr) warned this week that the Chancellor was on course to miss her borrowing targets by £41.2bn and will have to raise taxes or cut spending by more than £50bn to maintain her previous fiscal headroom.

But calls for higher taxes on gambling companies have been met with an outcry from the industry, with bosses arguing that a tax raid could force customers towards black market betting.

Peter Jackson, the chief executive of Flutter, said: “Flutter is already one of the largest taxpayers in the UK, paying nearly £750m in taxes in 2024.

“Raising taxes is not straightforward and we have operational experience around the world whereby if you continue to push tax rates up, you actually see a reduction in the tax take. This is the case in the Netherlands, for example, where the government is facing a €200m (£173m) shortfall.

“From our perspective, it’s important that we keep customers in the regulated market, where there is significant investment in safer gambling and player protection.”

Louie French, the shadow gambling minister, criticised the reported plan in a post on social media. He said: “The UK’s regulated gambling industry supports over 100,000 jobs, contributes billions to the economy each year and is a major sponsor of our much-loved sports. Labour’s short-sighted tax raid will only fuel the black market, hurting jobs, British sports and punters.”

A YouGov survey of 6,153 Britons this week found 42pc of respondents would strongly support higher taxes on online gambling, while 28pc would somewhat support rises.

Rises would be somewhat opposed by 8pc, the survey said, while a further 8pc said they would strongly oppose rises. The remaining 15pc said they did not know.

A Betting and Gaming Council (BGC) spokesman added: “We completely reject the proposals by the IPPR, which Gordon Brown has based his calls for a drastic tax hike on, and which will only hit ordinary punters.

“These proposals are economically reckless, factually misleading, and risk driving huge numbers to the growing, unsafe, unregulated gambling black market, which doesn’t protect consumers and contributes zero tax.”

The Treasury declined to comment.

Evoke and Entain declined to comment on the share price falls.

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