Manchester threatens to take the government to court over Gordon Brown’s decision to scrap a Las Vegas-style super-casino promised to the city. Legal advisers told the Labour-controlled city council that it has strong grounds to seek a judicial review of the prime minister’s U-turn over the gambling act, the Financial Times said.

Sir Howard Bernstein, the council’s CEO, said yesterday: „We will look very carefully at how we protect our interests. I wouldn’t rule out legal action.“

A review of alternative means of regenerating East Manchester, commissioned by the prime minister, has failed to come up with any proposals that would match the 3,500 new jobs and USD 515 million of private investment the super-casino was set to bring in, Sir Howard told the FT.

Ministers discussed with the council whether it would accept one of the eight large casinos permitted by the new gambling act as a consolation prize for being denied the super-casino.

But Sir Howard said this would generate fewer than 500 jobs, asking rhetorically: „Why would we want one of those?“ He said the government „asked us have we got a Plan B? We said the only [acceptable] Plan B was how do we deliver 3,500 new jobs“.

Manchester’s stance puts Brown in a quandary. He ordered a review of Tony Blair’s proposal for a super-casino within days of talking over as prime minister, authorising officials to brief that the plan was now „dead in the water“. The move was seen as a politically astute, tabloid piece of political repositioning.

But the courts could take a different view. Brown’s call for a period of „reflection“ to see whether there were better ways of regenerating the areas considered for the super-casino came at a late stage in the process. Manchester had already won an independently run competition to host the super-casino, and a parliamentary order authorising this – and 16 other casino sites – had been voted through by MPs and only narrowly defeated by the Lords.

Ministers still want the 16 non-contentious new casinos to be authorised. But bringing forward a new order to do so would be likely to trigger a legal challenge from Manchester. The government insisted yesterday that the super-casino proposal will not be revived. Hazel Blears, communities secretary, will conclude her review of the regeneration alternatives to the supercasino „shortly“.