LONDON (Reuters) - Gordon Brown has backed away from plans to build a Las Vegas-style supercasino in Manchester, saying there may be better ways to encourage economic growth there.
A source close to government told Reuters: "The regional casino is pretty much dead in the water", adding that plans for 16 new smaller casinos would be unaffected.
In January Manchester unexpectedly won a competition to host the only supercasino under Britain's controversial casino expansion plans.
The project was expected to generate 2,700 jobs through its 5,000 square metres of gaming floors and bars and in surrounding cinemas and hotels.
But in March politicians, led by church leaders in the Lords, rejected plans to build the Manchester casino, following months of campaigning by anti-addiction campaigners.
"This is an issue on which there is no consensus found in the two houses of Parliament," Brown told parliament on Wednesday.
"I hope that during these summer months we can look at whether regeneration in the areas for the supercasinos may be a better way of meeting their economic and social needs than the creation of supercasinos," he added.
NO VOTES TO BE WON
"There is no need for panic," said Manchester City Council leader Richard Leese. "We will continue to push for a destination casino in East Manchester."
The government under former Prime Minister Tony Blair had originally envisioned over 20 Las Vegas-style casinos but, faced with strong opposition, cut that number back to eight and then just one.
Neil Goulden, chief executive of Europe's biggest gambling company Gala Coral, told Reuters: "Gordon Brown apparently knows there are no votes to be won on gambling issues, just negative press. It's a shame as there are good solid economic impacts from gambling."
Overseas casino operators invested millions of dollars in planning and lobbying in the UK. Potential bidders to run the Manchester casino included U.S. operators Las Vegas Sands and Harrah's and Ladbrokes and Rank.
"The casino gaming industry has likely spent a combined $10 to $20 million (4.9 to 9.8 million pounds) on UK business development efforts over the last couple of years," said Jonathan Galaviz of Las Vegas-based consultancy Globalysis.
Rodney Brody, head of UK development at Las Vegas Sands, said he was not surprised, following recent back-tracking by the government.
"We've invested a lot, but if it doesn't work in the UK, we'll look at Europe," he told Reuters. "We could spend billions of dollars there and create up to 40,000 jobs."
Shares in Ladbrokes remained broadly flat, while shares jumped 2.8 percent in Rank, which already has five casinos in the Manchester area that might have suffered from increased competition.
Don Foster, culture secretary of the Liberal Democrat party, said: "This is the clearest indication yet of a change of heart by the government over supercasinos."
He urged the government to press on with plans for the 16 smaller casinos, but the source close to government said that was unlikely to happen before the summer recess starts at the end of July.
That would put a key vote to approve the 16 casinos after a forthcoming study into the impact of gambling in the UK.
"I wouldn't be surprised if that study led to a lot of negative headlines, leading to further defeats for the casino plan," said a casino industry executive.