The Competition and Markets Authority (CMA) said a tie-up between Britain’s second and third largest bookmakers may give rise to competition issues in 642 local areas.
The CMA said the sales must be substantially completed before the merger can go ahead.
“BoyleSports, Ireland’s largest independent bookmaker, has a long-stated ambition to create a retail presence of scale in the UK,” BoyleSports said.
Ladbrokes operates around 2,227 betting shops in the UK and Coral around 1,850.
The combined group will overtake market leader William Hill.
Ladbrokes agreed the terms of a £2.3bn (€2.75bn) all-share merger with Coral in July last year, and shareholders backed the deal in November.
Gala Coral is owned by a group of private equity companies including Apollo, Anchorage and Cerberus.
Britain’s betting sector is seeing a wave of consolidation.
On Monday, William Hill, which is without a chief executive, said it had received a preliminary takeover approach from casino operator Rank and online gambling group 888 Holdings.
Last year, William Hill failed in a takeover attempt of 888 itself, while 888 had agreed to buy UK-listed Bwin.party but was jilted in favour of GVC Holdings.
Paddy Power and Betfair agreed to join forces in September. Shares in Ladbrokes, up 13.7% so far this year, was trading yesterday at 136.1 pence, valuing the business at £1.38bn.
William Hill on Monday had given a frosty response to a proposed takeover bid from 888 Holdings and Rank Group, saying it saw little merit in the merger.
“It is not clear that a combination of William Hill with 888 and Rank will enhance William Hill’s strategic positioning or deliver superior value to William Hill’s strategy,” it had said.
William Hill shares were trading yesterday at 327.2 pence, valuing the company at £2.96bn.