Ladbrokes, the leading British bookmaker with a major presence in Ireland, has ditched plans to break into the UK casino market in a blow for government plans to issue 16 new casino licences to local authorities.

James Purnell, the UK's culture minister, is expected to announce in the next few weeks the formal burial of the proposed supercasino in Manchester.

He will, however, give the go-ahead for eight large and eight small casinos.

Ladbrokes, however, will not be among the bidders to run them.

"We have conducted a review of our casino strategy and have decided to withdraw from the process due to the length of time it would take to generate sufficient return on the capital spend required," it said.

Ladbrokes' decision raises doubts about whether any of the other leading gaming operators will bid for the new casinos.

The UK government's increase in casino duty in last year's budget, the smoking ban and the removal of lucrative gaming machines, as required under the Gaming Act, have left casino operators nursing damaged businesses.

Though much smaller in scale than the now defunct supercasino, the licences for the 16 smaller offerings still attracted a flurry of bids from local authorities because of their potential for economic regeneration.

But the prospect of not even these casinos getting off the ground would be the final humiliation for a policy that once envisaged 40 supercasinos being built in the UK. The policy was embroiled in controversy over alleged ministerial links to US operators.

Ladbrokes appeared to have given up casinos in 2000 when Gala Coral bought 26 of its casinos when the bookie was part of the Hilton Group.

Two years ago, however, it opened a casino in the Paddington Hilton hotel in London. - ( Financial Times service)