The recommendations of a review carried out by the gambling regulator earlier this year said the maximum stake should be set at or below £30.
But Chancellor Philip Hammond has opted to accept advice from campaigners for a more drastic reduction to £2, according to The Times.
FOBTs currently allow punters to gamble up to £100 every 20 seconds.
Betting firms are bracing for a profits hit as a result of the change, and have warned of potential shop closures.
Shares in William Hill, which employs more than 1,000 people in Yorkshire, tumbled 14 per cent, PaddyPower was down 5 per cent and Ladbrokes owner GVC shed 7 per cent following the report.
Michael Hewson, chief market analyst at CMC Markets, said: “High street bookmakers have taken a beating on concerns that the stake on fixed odds betting terminals might be cut from £100 to a maximum of £2, with William Hill sharply lower, along with Paddy Power Betfair and Ladbrokes owner GVC Holdings.
“This has also raised concern that other gambling taxes may rise to offset the loss of tax revenues that this cut would precipitate.”
FOBTs have been described as the “crack cocaine” of gambling, with Culture Secretary Matt Hancock also thought to be supportive of the £2 figure.
Several public bodies have criticised their impact on problem gamblers.
A final decision is thought to be weeks away