Prizes will double to £70 and the maximum stake will rise from 50p to £1. It is the second rise in two years.
Andy Burnham, the Culture Secretary agreed to the increases because "many operators across the gambling industry are finding trading conditions very difficult in the present economic climate".
This decision comes as the number of machines being manufactured has fallen by 55 per cent since 2005 and revenue in arcades has dropped by 21 per cent since June 2007.
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