Business leaders in Coventry claim the city has being "punished" in its bid to host a regional casino because of its success in regeneration.
Stuart Linnell, chairman of Coventry Chamber of Commerce, said the Ricoh Arena was not short-listed as a regional casino candidate because the north of the city was already being regenerated.
More questions should be asked of the Government as to why it performed a u-turn in only allowing one supercasino, when there were originally plans for more, he said.
The Government's Casino Advisory Panel has rejected all three West Midland bids.
Dudley, Solihull and Coventry all failed to make the shortlist, while Blackpool, Brent, Cardiff, Glasgow, Sheffield, Greenwich, Manchester and Newcastle were included.
Mr Linnell said: "Is Coventry being penalised for getting on with its regeneration?
"Because we are already making significant strides towards improving the quality of life and the standard of living in the part of the city which was crying out for the development, are we being told that our efforts do not count when it comes to seeking that vital extra economic boost that would follow from the award of the regional casino licence?"
He accused Ministers of giving in to media pressure from newspapers opposed to new casinos.
"The Government has been busily denying that it is dealing with legal issues and the justice system by way of a knee-jerk response to tabloid newspaper headlines.
"Yet it did a complete reversal of policy over the relaxation of the gaming laws when it virtually overnight cut down the number of proposed regional licences from eight to one in the face of a campaign against its plans by the Daily Mail."
Mr Linnell also said he was outraged that Advantage West Midlands, the regional development agency, was backing Solihull's plans to build a regional casino at the National Exhibition Centre.