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LONDON, July 25 (Reuters) - Bookmakers Ladbrokes andGala Coral must sell around 350 to 400 shops in order to obtainclearance for their proposed merger, Britain's competitionregulator said on Tuesday.
The Competition and Markets Authority (CMA) said that atie-up between Britain's second and third largest bookmakers maygive rise to competition issues in 642 local areas.
The CMA said the sales must be substantially completedbefore the merger can go ahead.
"It is now for the parties to propose a divestment packageand one or more suitable purchasers for the CMA to approve,"said Martin Cave, who chaired the inquiry.
Ladbrokes operates around 2,227 betting shops in the UK andCoral around 1,850.
The combined group will overtake market leader William Hill.
Ladbrokes agreed the terms of a 2.3 billion pound ($3.01billion) all-share merger with Coral in July last year, andshareholders backed the deal in November.
Gala Coral is owned by a group of private equity companiesincluding Apollo, Anchorage and Cerberus.
Britain's betting sector is seeing a wave of consolidation.
On Monday William Hill, which is without a CEO, said it hadreceived a preliminary takeover approach from casino operatorRank and online gambling group 888 Holdings..
Last year William Hill failed in a takeover attempt of 888itself, while 888 had agreed to buy UK-listed Bwin.party but wasjilted in favour of GVC Holdings.
Paddy Power and Betfair agreed to join forces inSeptember.
Shares in Ladbrokes, up 12 percent so far this year, closedon Monday at 134.2 pence, valuing the business at 1.4 billionpounds.($1 = 0.7631 pounds) (Reporting by James Davey; editing by Sarah Young and LouiseHeavens)