Shares at William Hill opened more than 8 percent lower after betting makers warned that "regulatory changes and adverse taxes" would weaken revenue from online operations.
The group said in a trade update that its full-year operating profit would be in the range of £ 225m-£ 245m, against previous analyst expectations of revenues of up to £ 260m.
The British government has forced betting makers to increase control in areas such as money laundering and gambling problems, by conducting additional checks on people who bet online. Chancellor Philip Hammond also plans to increase taxes paid by gambling companies that base their operations offshore.
"Changes in adverse regulations and taxes will have an impact on online profit growth in 2018 and 2019, including an improved customer due diligence process and increased long-distance gaming tasks to 21 percent," said William Hill chief executive Philip Bowcock.
"The gross effect is to reduce profits by £ 20 million in 2018 and then £ 25 million by 2019," the group added, while also predicting that its online business will return to profit growth from 2020.
In the period from June 27 to October 23, William Hill said online net income had fallen 5 percent, while store income was 4 percent lower. The US business group is a bright spot, however, with revenues up 6 percent.
"We continue to experience a period of significant change for our industry and have made important changes over the past two years to change our digital business, expand our management team and increase our financial flexibility ahead of major regulatory changes," Bowcock said. .
After the first few minutes of London trading, stocks had recovered slightly to trade 6.5 percent lower at 199.8p.