Bosses of leading UK betting firms have sent a letter to Culture Secretary Matt Hancock in a bid to prevent the imposition of a £2 top stake on fixed-odds betting terminals (FOBTs).
At present gamblers can wager up to £100 a spin on the electronic machines.
Ladbrokes' owner GVC, William Hill, Betfred, Scotbet, and Jenningsbet say a £2 limit would have a "catastrophic impact on jobs and the economy".
And they have called on Mr Hancock "not to sacrifice betting shops".
They warned: "A maximum stake of £2 on FOBTs is a de facto ban on the machines as the games are not feasible at that level."
The firms, as well as the Association of British Bookmakers, are now seeking talks with Mr Hancock.
The Department for Digital, Culture, Media and Sport (DCMS) is leading a review into the machines, and media reports last week suggested that the Treasury will back a reduction in the maximum stake.
Those reports said Chancellor Philip Hammond was willing to reduce the highest amount people can bet from £100 a spin to £2.
"As the chief executives of UK retail betting shops we would like to express our alarm, that according to media reports, the government has determined that the maximum stake on betting shop gaming machines should be reduced from £100 to the lowest possible level of £2," say the gambling executives in their letter.
"We acknowledge that the government is committed to reducing the maximum stake, however this should be a proportionate response and consistent with the evidence.
"For the avoidance of any doubt, we believe a £2 maximum stake is a disproportionate response and will be catastrophic for retail betting in the UK, with widespread consequences for people's livelihoods and the wider economy."
They say analysis from KPMG estimates that a £2 stake would result in 21,000 direct job losses, with half of betting shops closing, a loss to HM Treasury of £1.1bn over the next three years, a loss to local authorities of £45m and to British Racing of £50m per annum.
Last week the Treasury said it was "fully supportive of DCMS's work to ensure the UK's gambling regime continues to balance the needs of vulnerable people, consumers who gamble responsibly and those who work in this sector".
Last month, the UK's Gambling Commission recommended that the maximum stake for FOBTs should be cut to £30 or less.
Bookmaker William Hill derives 54% of its retail revenue from gaming machines.
GVC Holdings, has linked its deal to buy Ladbrokes Coral and its 3,500 betting shops, to the outcome of the review into FOBTs. If the maximum stake is cut to £50, GVC pays £3.9bn for Ladbrokes Coral. If it is reduced to £2, GVC will pay £3.2bn.
Revenues generated from FOBTs made up around 6% of Paddy Power Betfair's total sales of £1.7bn last year.