The UK's largest bookmaker, William Hill, is to close 109 shops, blaming the government's surprise hike in betting taxes on high-speed, high-stakes gambling machines. In last month's budget, the chancellor raised duty from 20% to 25% on any machines that can charge more than £5 to play, wiping out a significant portion of revenue from lucrative fixed-odds betting terminals (FOBTs), which account for half of bookmakers' gross profits.

William Hill said that if the tax had been applied last year, it would have cost the company £22m. Next year it said about 420 jobs could be lost as a result of the shop closures.

The chief executive, Ralph Topping, said: "As a direct result of the government's unexpected announcement about an increase in machine games duty to 25%, we have reviewed shop profitability and will be closing a portfolio of 109 shops this year, putting 420 shop employees at risk of redundancy.

In a broadside against the government, Topping said those bearing the brunt of the tax rise would be young workers and female staff – and his company's woes would be replicated across the industry.

He told analysts: "We fully expect other companies in the industry to be in a similar position. What's the effect of all that? Well, there's lost revenue to the government. Lost rents and more empty shops on the high street. There's lost jobs. But who loses those jobs? Women, for part-time workers and for 18- to 24-year-olds. 57% of our retail colleagues are women, 30% of them are aged 18 to 24."

The rise of the machines, on which punters can bet up to £300 a minute, has been dramatic and controversial. Accused of being highly addictive as well as being linked to crime, the terminals have been in ministers' sights since January, when the prime minister said there were "problems in the betting and gambling industry".

In the next fortnight ministers are expected to announce a range of regulatory and planning powers to curb the clustering of shops. However, the industry is addicted to the cash that FOBTs generate. Since 2010, annual player losses have grown from £1.3bn to £1.5bn. In a conference call with analysts, William Hill, which has 2,434 outlets across the UK, admitted that each machine generated £926 a week, up from £904 the year before.

There is also concern that betting shops are concentrated in poorer areas – a potential source of social disorder in vulnerable communities. A report in February found that more than £13bn was gambled on high-stakes machines last year by the poorest quarter of England's population.

Campaigners against the machines said they doubted whether the closures would be as substantial as the bookmakers claimed. Adrian Parkinson, a spokesman for the Campaign for Fairer Gambling, pointed out that last year William Hill had "opened 120 shops but closed about 70".

"In William Hill's 2013 annual report, the company state that they are continuing their strategy of increasing their estate by 1% each year. Indeed, in 2013 they ended up with 59 more shops than they started with. That was about a 2% increase in their shop estate. So it remains to be seen whether these proposed shop closures are negated by new shop openings and whether any of these closures will be compensated by relocations."

Parkinson said that just two operators – Ladbrokes and William Hill – now own 52% of all UK betting shops – up from 48% just four years ago. Expansions such as this are often followed at some point by a reassessment of the whole estate, just as Ladbrokes, which has grown by 10% compared with William Hill's 5% growth over this period, has done.

Shares in William Hill and Ladbrokes fell sharply last month. Ladbrokes has also said it will close shops.

However, William Hill reported a further leap in the revenues from its betting websites, with stakes laid online by punters up 39% year on year. Gambling on mobile devices was up by 78%. But it said operating profits had fallen by 14%, which it partly attributed to two weeks out of 13 in the quarter when customers laid successful bets.

Analysts said that the closure of stores would not affect William Hill's prospects unduly. Simon Gergel, at Allianz Global Investors, said: "Overall we think William Hill is well positioned for the future of the UK and international betting industry, which is being driven increasingly by online betting."