Ladbrokes and Coral must offload 350 to 400 High Street stores as a condition of their proposed STG2.3 billion ($A4.04 billion) merger, the Competition and Markets Authority has said.

In its final report into the merger, the CMA found the deal could "lead to a worsening of the offer made to customers at both a local and national level" in the gambling market.

The proposed merger would create Britain's biggest bookmaker with around 4000 betting shops, but the CMA has identified 642 areas across the country where the deal could harm competition.

The store sales must be formally approved by the CMA before the deal can move forward.

"We've found that the merger between two of the largest bookmakers in the country would reduce competition and choice for customers in a large number of local areas," the antitrust regulator's inquiry chairman Martin Cave said.

"For these customers, competition comes from the choice of shops in their local area and they would lose out from any reduction of competition and choice."

Coral said in a statement the two companies planned to press ahead with the store sales and aimed to complete the deal by the autumn.