The Government has scrapped the proposed ‘super-casino’ for Manchester amid concerns that it would have a negative effect on Manchester, but may unveil a compensation package for East Manchester.

Culture secretary Andy Burnham confirmed that 16 smaller casinos in places like Leeds and Milton Keynes were still to go ahead. Burnham said the casinos would be the most heavily regulated in the world, with a ban on credit cards, free drink promotions and restrictions ensuring the doors were closed for at least 6 hours a day.

Sir Richard Leese of Manchester City Council was disappointed with the result and would not rule out legal action. The casino would have created around 3,000 jobs and £265m of investment in East Manchester.

The compensation package will include £10m to turn it into a world-class destination for sport.

Leese said: “We are disappointed with the Government’s expected announcement. We believe a regional casino provides the best regeneration benefits for East Manchester and we will continue to pursue this. A regional casino will deliver around 3,500 new jobs for East Manchester and an increase in Manchester’s GVA equivalent to £1bn over 10 years.

“ Manchester’s key regeneration objectives remain to bring jobs to deprived communities and to get local people into those jobs. To that end we will engage with the Government to achieve our regeneration objectives for the city as a whole and East Manchester in particular, but we need the clearest commitment that any package would deliver the greatest possible benefits.

“We are committed to doing all we can, and we have drawn up a range of regeneration options to benefit local people in East Manchester including the extension of the life of New East Manchester till 2014/15 with an associated budget of £20m per year; developments at Sportcity to create an additional 1,600 jobs; digital developments with 500 jobs; a national skills centre with 200 jobs; a digital and animation business cluster with 250 jobs and also the relocation of Government functions, including hundreds of jobs for local people.”