City casino plans in a spin

All bets were off last night as peers narrowly blocked plans for Britain's first super casino in Manchester and 16 smaller gaming palaces around the country, including at Wolverhampton and Birmingham's NEC.

Peers plunged the agenda into chaos by voting down the regulations to approve the setting up of the casinos by 123 votes to 120.

It means the Government will have to present the legislation to the House of Commons again, where it successfully fought off a rebellion and the proposals were passed by MPs with a majority of only 24 – virtually at the same time as the Lords was throwing it out.

It was double or nothing for the Government which had to win the vote in both Houses after Culture Secretary Tessa Jowell refused to separate the super casino from the 16 smaller venues.

The super casino and others in places such as Great Yarmouth, Southampton, Leeds and Milton Keynes faced a coalition of opposition from Tory and Liberal Democrat peers, Labour Lords opposed to gambling and others angry about the choice of Manchester ahead of Blackpool.

Ministers were today reflecting on the defeat and talking to local authorities about the way forward.

The shock result leaves the vision of a Las Vegas-style casino and the creation of Britain's first "racino" at Dunstall Park racecourse in tatters, with the issue not returning to the table until at least May.

* News Wolverhampton's casino hopes may never leave the table was today met with dismay in the city.

Wolverhampton council leader Roger Lawrence said: "We worked hard on the bid and were really pleased to be selected but then we were all sucked in by this Manchester-Blackpool super casino debate."

He said the local authority would be entering into further discussions with the Government in the hope that plans for the 16 small casinos could emerge.