The proposal is part of the Local Government Association (LGA)’s call for councils in England to be given the same powers to limit the proliferation of betting shops and high-stake Fixed Odds Betting Terminals (FOBT) that are being handed to Scotland, after the Smith Commission recommended that control over gambling policy and legislation be devolved to the Scottish Parliament.
The LGA, which represents councils in England and Wales, has said that a cumulative impact test should be introduced to enable councils to reject applications for new betting shops where there are already existing clusters of shops.
LGA licensing spokesman Tony Page said that such a test would "rightly give councils the power to veto new shops in areas already saturated by betting shops" unless firms can prove they would benefit the local economy.
The LGA's proposals also include updating licensing laws to allow councils to take health issues associated with problem gambling and anti-social behaviour concerns into account when considering applications.
"Councils are not anti-bookies but many are frustrated by limited powers available to them to act on community concerns and limit the number of shops opening up in their area," said Page.
"Councils ultimately need tougher powers to enable them to support local high streets and economies through ensuring diverse high streets."
The LGA set up a Betting Commission earlier this year to aid cooperation between councils, trade body the Association of British Bookmakers and major firms including William Hill, Coral, BetFred, Ladbrokes and Paddy Power.