The Gambling Commission study suggests that 450,000 children aged 11 to 16 bet regularly, more than those who have taken drugs, smoked or drunk alcohol.
Bets with friends, slot machines, and scratchcards, were most popular.
A campaigner on the issue, Bishop of St Albans Right Reverend Alan Smith, called it a "generational scandal".
"Today's findings by the Gambling Commission makes worrying reading and serves as a warning to parents," he said.
The Young People and Gambling report found: