Plans for a multimillion-euro Las Vegas-style casino appear dead after new laws were announced ruling out large-scale gambling resorts.
The €460m Tipperary venue near Two-Mile Borris, which was being promoted by Independent TD Michael Lowry, with a betting and leisure complex complete with horse and greyhound tracks and a chapel, was given the green light by planners in June.
But Taoiseach Enda Kenny said such large-scale gaming venues have been ruled out, claiming the Government was concerned about the protection of the young and vulnerable.
"We've made the decision to update and introduce modern gambling legislation," Mr Kenny said.
"This will mean the implementation and supervision of a properly controlled small number of gambling casinos.
"We do not believe there is a need for resort-style casinos in the country and the Cabinet have rejected that."
The idea is being driven by Richard Quirke, owner of the Dr Quirkey's amusement arcade in Dublin's O'Connell Street.
A spokeswoman for the development said Mr Quirke would meet with architect Brian O'Connell and Mr Lowry to discuss options available to them, including dramatically scaling the project back.
Justice Minister Alan Shatter said the Government has agreed to start work immediately on drawing up the new laws.
Mr Lowry - a former Fine Gael TD - said he was disappointed as the project had the opportunity to create 2,000 jobs for Tipperary.
"We always had to entertain the possibility that we wouldn't get a licence," he said.
"We were always conscious of that."
The Tipperary North TD said Mr Quirke could now look at the possibility of implementing the various aspects of the plan on a phased basis, instead of building the planned project in one go.
The Tipperary Venue site, 9km from Thurles, was being planned in true Las Vegas style with a church with an 18m-high steeple and a replica of the White House, known as the Hoban Memorial Building in honour of architect James Hoban.
It was to include a reproduction of Lafayette Park, the grounds at the front of the US President's residence.
The sports and gaming facilities were to include all-weather horse racing and greyhound tracks, and a 6,000 square metre casino in the hotel.
Mr Shatter said under the new laws "modest" sized casinos will be permitted, but will be limited, with applications subjected to rigourous checks.
"Only those promoters meeting high standards of personal and financial probity will be considered for a licence," he said.
The minister said the Government was concerned that large-scale developments would attract activities that are not desirable and pose a risk to vulnerable people.
"The Government feels it would not be acting in the public interest if through the forthcoming legislation it encouraged or facilitated the larger developments in the face of such real and substantial doubts about their viability," the minister said.
The 800-acre development is opposed by An Taisce, a handful of local residents and anti-gambling bodies including the Ireland Against Casinos group, which fought a development on the old Phoenix Park racecourse.
While An Bord Pleanala gave the project the green light in June, proposals for a money-spinning 15,000-capacity concert hall were rejected, with planners warning it was inappropriate considering the rural location.
An Taisce said it was heartened by the Government's decision.
Charles Stanley-Smith, An Taisce chair, said: "An Taisce is guided by the principles of sustainability and when we talk of sustainability, we include environmental, social and economic sustainability, because the three are irrevocably interlinked. The economy resides within society and society is entirely dependent on the environment.
"An Taisce appealed the Tipperary Casino to An Bord Pleanala on planning grounds but questioned the societal benefits that were meant to accrue."