Bookmakers have been asked by the Gambling Commission to trawl through all substantial bets placed on a July election after one of Rishi Sunak’s closest aides put a wager on the poll date just days before it was announced.

The prime minister said he was “disappointed” with the behaviour of Craig Williams, which was revealed in the Guardian, but neither would be drawn on whether they had discussed the date of the election prior to the bet being placed.

The watchdog has now asked bookmakers to provide information on all substantial bets on the timing of the election after odds shortened on a July poll in the week before the date was announced.

Williams, who is standing for reelection in Montgomeryshire and Glyndŵr, placed a £100 bet with Ladbrokes on a July poll. The Gambling Commission launched an inquiry after the bet was referred to them by the bookmaker.

Williams, Sunak’s parliamentary private secretary and who was MP for Montgomeryshire until parliament was dissolved, would not confirm if he had insider information on the date.

The prime minister refused to be drawn on whether he would disown Williams as a candidate, saying: “It is very disappointing. Craig Williams has said that it’s a huge error of judgment. Now there is an independent inquiry which is confidential and it’s important that that is allowed to continue. It’s not appropriate to say anything while that’s ongoing.”

It understood the watchdog wrote to all licensed bookmakers this week requesting information on anyone who stood to gain more than £199 by betting on a July election in the UK.

The commission also asked bookmakers to confine the search to all customers making such bets in the first three weeks of May. In a three-page letter to bookmakers, the commission did not mention Williams by name but confirmed that the regulator had been given information relating to matters of betting integrity around the date of the election. The commission said it did not want to comment on the investigation.

One industry source said any MP placing a bet on the date of the election would have been likely to have been flagged – not just those close to Sunak. Political betting was a small market, they said, and relatively easy to monitor when a punter may have had access to insider information.

The Guardian’s article prompted fury inside the Conservative campaign, with concerns that it would “cut through” in a way that would resonate with voters. “I hope they throw the book at him,” one senior Conservative said. One MP suggested Williams should stay away from any Welsh manifesto launch.

The Liberal Democrats said Sunak should order a Cabinet Office inquiry into whether Williams knew at the time of the bet, and they should be given access to any communications between him, Sunak, and his No 10 staff, including WhatsApp messages.

“This inquiry is needed to get to the bottom of who knew what when, and uncover whether Craig Williams knew the election date at the time the bet was placed,” Daisy Cooper, the Lib Dem deputy leader, said.

On 14 May, just over a week before the general election was called, the odds on a July general election were 10/1 with Ladbrokes. By the time Williams placed a bet on a July contest the odds had already halved to 5/1.

It had been reported that deputy prime minister, Oliver Dowden, was pushing for an early election date.

On Wednesday Williams admitted to a “flutter” on one of his betting accounts and conceded: “I should have thought how it looks.” Dyfed-Powys police said it had not received any complaint about the bet.

Oliver Lewis, the Reform UK candidate for the seat, called on the Tories to withdraw support for Williams. He told the Daily Telegraph: “This is completely tawdry, low-grade behaviour by somebody who was at the right hand of the prime minister.”

The party does have the option of pulling its support, as Labour did with Azhar Ali, its candidate in the Rochdale byelection, over comments he made about the 7 October attacks on Israel. Ali’s name was on the ballot paper but, without Labour’s official backing, he slumped to fourth in a contest that was won by George Galloway.

Prof Jon Tonge, who teaches British politics at the University of Liverpool and regularly places political bets, urged Williams to make clear whether he had made any other bets on the date of the poll.

He said: “I think it was very, very foolish because there was every chance of a bet like that leaking out. The optics of it are awful. He should have been more self-disciplined and not put it on. It is yet another act of political folly from the Conservatives during a wretched campaign.”

Tonge said the bet was “potentially the political version of insider trading” if it could be proved Williams knew of the date of the election. But he added: “It would be very difficult to prove unless there’s a communication trail that shows that he was in possession of the knowledge of the election date.”