Rank's plans to buy Gala Coral referred to Competition Commission

Analysts warned the deal, which it was thought could have gone through as soon as next month, could now be de-railed altogether.

The OFT said it was concerned that the takeover would “substantially” reduce competition nationally and in nine local areas.

Rank operates 34 casinos in the UK under brands including Grosvenor and GCasino. Gala operates 23 casinos, most of which operate under the Gala brand. The acquisition would take Rank’s share of the number of British casinos from 25pc to 44pc. At the moment, Genting has the largest number with 28pc of the market.

Ali Nikpay, the OFT director who made the decision, said: “This merger would represent a major consolidation which could be expected to reduce competition, both locally and nationally. The high barriers to entry and expansion in the casino sector mean the loss of competition could potentially be irreversible.”

The OFT noted Rank’s offer to “provide undertakings” to reduce the dominance of the combination but said they were “not considered sufficiently clear-cut to address all of the con The Competition Commission is expected to report back by February. Rank said was “considering the implications of this decision and a further announcement will be made in due course.”

James Hollins, an analyst at Investec, said the referral was a “surprise” and a “disappointment”. In a note he said: “We, and the company, had been hopeful that the OFT would take a view on casinos as part of a wider gambling industry.. but the referral appears to negate that view.”