Last June, An Bord Pleanála gave the go-ahead for a casino, 500-bedroom hotel and racetrack complex at Two-Mile Borris in Co Tipperary.
However the Irish Cabinet have now rejected the scale of the casino proposed.
Minister for Justice Alan Shatter said the casino at Thurles was "out" based on a decision at Cabinet level.
He said there was no need for a resort style casino in Ireland and the Government would make provision for more modest casinos as exist at present in the country.
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Independent TD for Tipperary North Michael Lowry, who backed the complex, said he was surprised and disappointed by the decision.
Mr Lowry said the project had the potential to create 2,000 long-term jobs and that the developer would now have to consider whether the project was viable or if it could be rolled out on a phased basis.
Meanwhile An Taisce have welcomed the decision - they had been opposed to the scale of the development from the outset.
Spokesperson for the promoter of the Tipperary Venue, Richard Quirke, said he is due to meets his team in the next few days.
They will assess Minister Shatter's statement and the impact it will have on the venue. He will make a statement in due course.
For more information see: Vegas Comes To Tipp
(LB/BMcC)
