Unlike Manchester's victory in January, last week's casino vote was not a huge surprise. But the Lords' rejection of the Casinos Order was still a big setback for Ministers. On the ground, the vote seems to have galvanised local opposition in the 17 'casino cities', leaving local plans in disarray.

The loss was due to politics as much as policy. The Government was hit by a triple whammy: opposition to Manchester, opposition to gambling, and opposition to Labour.

First, many Lords and MPs wanted the supercasino in Blackpool, not Manchester. More than 100 Labour MPs had already signed a motion supporting the seaside town.

Second, a much larger group opposed the Government's whole gambling strategy. They saw the Manchester versus Blackpool battle as a chance to re-open a broader debate on casinos, and derail a significant part of the 2005 Gambling Act.

Finally, the Conservatives played a neat political hand. Following a recent critical Lords committee report, it was clear that the Government would struggle to push its order through. Cameron saw a chance to ambush Labour and reversed the Tories' earlier support.

However, while the casinos strategy is damaged, it is not dead yet. Before the vote, culture secretary Tessa Jowell insisted there was 'no Plan B that was easily implementable'. But afterwards, she pronounced the casinos strategy 'very much alive'.

In the short term, ministers have promised Blackpool a regeneration taskforce - although what this would add to the existing urban regeneration company is unclear. They will also set up a new parliamentary casino committee to review the supercasino decision, and discuss whether Blackpool has a case for winning a super-casino in the next parliament. This is wise: unravelling the independent Casino Advisory Panel's initial recommendations could lead to legal challenges from all the other losing cities.

In the medium term, Jowell now has three further options:

• Check: allow for some cooling off time, allow the committee to report, and push the Order through both Houses
• Bluff: signal to Blackpool that it will get its own supercasino at some future point
• Fold: break off the legislation on the 16 small casinos, pass a separate Order and approach the supercasino at a later date.

But only one of these game plans stands much of a chance. The first would be tough. Alone, the casino committee won't placate the Blackpool lobby - unless it explicitly signals that a better thought-out casino could get the go-ahead in the future. The Government would then need to provide a timeline - and fend off anti-gambling opposition.

Bluffing is even less attractive. The Government cannot afford to pre-judge the committee. And Ministers have already ruled out further supercasinos in this Parliament.

So the best strategy is to fold. The Government should find it fairly easy to get the 16 smaller casinos approved. But unless the supercasino decision is implemented quickly, it could become swept up in some much bigger games.

The key issue is political: what will Gordon Brown do, assuming he shortly becomes Prime Minister? So far the Chancellor has kept well away from the front line. But he seems to be emerging as a gambling sceptic, whacking a 50% tax on supercasino takings in last month's Budget (with 15% on takings in other casinos).

Given the political flak around the issue at the moment, it is hard to see Brown championing gambling-led regeneration in his first 100 days. A further row may be brewing here. Opponents of gambling are already worrying about the next battle. Industry operators want to increase the numbers of slot machines in their existing premises, in line with the new casinos. The Government has ruled this out, but it is now likely that a judicial review of that decision will go ahead this summer. Ministers would then face another big argument over gambling addiction - right in the middle of Labour's succession.

All this suggests that come summer, any unfinished casinos business will be parked for a while. And a further round of big casinos is probably off the agenda, at least for now.

For all bar one of the casino cities, the vote should mean little. After a delay while the Government readies its Plan B, the new casinos are still likely to get the go-ahead. But city leaders should expect renewed local opposition down the line - especially when operators submit their planning applications.

Similarly, Manchester is also expected to get its supercasino - although there may be a delay of many months while the political dust settles. Again, Manchester's leaders will have to deal with local opponents - and existing operators opposed to the new competition.

Blackpool, by contrast, should not bet on a supercasino this side of a General Election. The new committee will not reverse the Manchester decision. Blackpool's leaders need to improve their existing casino plans, and push on with preparing alternatives.

Realistically, other cities should forget about big casinos for the moment. They should test the political weather after the next Election. Until then, all bets are off.