LONDON (Reuters) - Bookmaker William Hill Plc (>> William Hill plc) will close more than 100 British betting shops this year, blaming the decision on a tax increase on high-stakes gambling machines that have become one of their main sources of revenue.

The Conservative-led government angered the betting industry by announcing an increase in tax to 25 percent from 20 percent on the machines in its budget in March, a move that will cost bookmakers around 75 million pounds ($126 million) a year.

Critics of the machines - which offer versions of games such as roulette - say they are addictive and complain there are too many betting shops in British town centres. But the industry says there is no evidence to support claims that they fuel problem gambling.

William Hill, Britain's largest bookmaker, said the tax rise meant there was no prospect of turning around a group of 109 loss-making shops from a total estate of over 2,400. The closures would put 420 jobs at risk and result in exceptional costs of up to 24 million pounds, it said.

"This is particularly disappointing as, through the economic downturn, we have worked hard to grow our retail base but this further planned increase in indirect taxation makes this action necessary," Chief Executive Ralph Topping said in a statement.

William Hill also said operating profit had fallen by 14 percent in the first quarter of 2014, hit by big payouts to gamblers on two weekends on which many top football sides had won. But the group is hoping heavy betting on the football World Cup in June and July will help to offset the first-quarter problems.

"While there is no guarantee we can make up the difference, we continue to believe the increased customer confidence from such wins should be good for business, especially in this World Cup year," Topping said.

Bookmakers face increased tax bills on two fronts over the coming year, with the government also closing a loophole that has allowed them to base online operations offshore.

William Hill shares traded 1.2 percent higher at 337 pence by 08:24 am British Time (0724 GMT), the biggest risers on Britain's FTSE 100 index of blue-chip companies.

Analyst Ivor Jones at brokerage Numis said William Hill was better placed than smaller competitors to cope with regulatory pressures and tax changes.

"We believe that William Hill is a market-leader which has seen a trough in trading in the first quarter of 2014 and will soon pass a peak of concern over regulatory risks," he said, maintaining a "buy" rating on the stock.

(Editing by James Davey)

By Keith Weir

Stocks treated in this article : Ladbrokes PLC, William Hill plc