Shares in Rank rose by nearly 11 per cent this morning as the troubled gaming group confirmed that Genting Berhad, the Malaysian owner of Britain's Stanley Casinos, has bought a 9.38 per cent stake in the company.

A spokesman for Rank said the company had been in contact with Genting: "We welcome any new shareholder that recognises the value of Rank's businesses and their prospects."

He added: "We look forward to a constructive relationship with them in the same way we do with all our major shareholders."

Rank's stock rose 10.95 per cent, or 11p, to 111.5p in early trading. The shares have been bumping along near a ten-year low of 80½p, hit by the smoking ban, a rise in gaming duty and new rules on gaming machines.

Analysts believe that Genting could use the 9.38 per cent holding to pursue a takeover of Rank, notwithstanding possible competition issues, although previously it has built stakes in companies and profited from takeovers by rivals.

Genting held a 29.8 per cent stake in London Clubs International (LCI) when it fell to a $669 million takeover by Harrah's Entertainment, the US group that owns Caesars Palace in Las Vegas. Only a few weeks earlier, Genting had bought Britain's Stanley Leisure for £639 million, making it the UK's largest casino operator.

Speculation is growing that Rank is being circled by predators including Harrah’s, Guoco Group, the Singapore company behind Thistle Hotels, and Ladbrokes, the bookmaker.

Harrah’s, itself the subject of a recommended $27.8 billion takeover by Apollo Management and TPG Capital, the buyout firms, is said to have approached Rank recently with an offer to swap part of its LCI business for a 28 per cent stake in Rank.

Ian Burke, the chief executive of Rank, has had informal meetings with Harrah’s officials in recent months. He is believed to have rebuffed the clubs-for-shares swap proposal and is unlikely to agree to a sale of Rank for anything other than a premium price, despite its recent difficulties.

In October, Rank gave warning that its full-year operating profits would be “significantly lower than in 2006”, when it achieved profits of £77.4 million.

The greatest damage was caused by the Gambling Act, which forced Rank to remove about 950 high-jackpot gaming terminals from its Mecca Bingo clubs at the beginning of September. The change also affected some of its Grosvenor Casinos.

The scrapping of so-called Section 21 machines compounded the decline in trading resulting from the smoking ban. There was a disproportionate impact on its Mecca clubs, where about 50 per cent of bingo players are said to be smokers. During gaps between main-stage games, players now go outside for a cigarette rather than playing interval games or fruit machines.

Rank claimed that the problems were affecting the wider market, resulting in “a period of volatility and lack of visibility unprecedented in the UK gaming industry”.

Genting itself revealed last month that the double whammy of April’s increase in gaming duty followed by the smoking ban had forced it to take a £120 million writedown against the value of Stanley.

Its Stanley business has a portfolio of 46 casinos, including Crockfords in Mayfair, Central London. When it took Stanley private last year, Genting said that it saw the company as “a platform for expansion in the soon-to-be deregulated UK gaming industry”.

However, plans to award 17 new casino licences under the Gambling Act have been delayed by the controversy surrounding the single super-casino envisaged under the new legislation.

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