Manchester will host the UK’s first Las Vegas-style super-casino, it has been announced.

The Casino Advisory Panel’s shock decision is a blow to Blackpool and the Millennium Dome, which were considered front-runners to win the licence.

Up to 1,250 unlimited jackpot gaming machines will be housed on a 5,000 square metre site. Steve Weaver, chief executive of Blackpool Council, whose bid was the bookmakers’ favourite, said the resort was "surprised and hugely disappointed by the Panel’s recommendation but we are not giving up".

The decision finally spelt the end of Birmingham's hopes to win the rights to open a super-casino at the NEC.

The £250m bid, backed by American gaming giant MGM, failed even to make the panel's shortlist.

News that Manchester will play host to the UK’s first super-casino was met with dismay by those hotly tipped to win the bid. Blackpool and Greenwich were considered much more likely prospects - and the news came as something of a shock.

Steve Weaver, chief executive of Blackpool Council, said the town had "no other realistic alternatives" for regeneration.

"We are surprised and hugely disappointed by the panel’s recommendation but we are not giving up.

"The decision that the panel is proposing is an enormous missed opportunity for Blackpool to become a world-class resort destination. A regional casino would be a catalyst for substantial change in Blackpool."

Blackpool Council leader Roy Fisher said: "We are one of the most deprived communities in the North West.

"I believe the regeneration that would have been brought about would have raised us out of that depravation.

"We believe Blackpool’s case was very very strong: for us it was the cake, for Manchester it was the icing on the cake."

The Bishop of Manchester, the Rt Rev Nigel McCulloch, said in his capacity as chairman of the Greater Manchester Faith Community Leaders Group: "We recognise that the Manchester super-casino will have a major impact on the local and regional economy; but we are seriously concerned about its social and moral effects.

"As Faith Community Leaders we have a responsibility to work for the prevention of problem gambling and for the support of its victims.

"We are already monitoring the situation though the Problem Gambling Group, which liaises with the City Council, and pressing for an appropriate strategy and resources to be put in place."