Proposed casinos in Solihull and Wolverhampton were today given the green light after 8 months of delays but they may be forced to pay a new gambling tax.
Culture Secretary Andy Burnham announced that the Government was scrapping plans for a massive "supercasino" in Manchester.
But Solihull will be allowed to press ahead with a major casino offering 150 slot machines with a maximum jackpot of s4,000.
Wolverhampton's plans for a smaller casino, including up to 80 slot machines, also received the green light.
The decision means that both councils are in the same position as they were last July, when the Government launched a review into its controversial casino policy.
Ministers were criticised by opposition MPs, who claimed local council-tax payers would pay the cost of Government "dithering".
Solihull MP Lorely Burt (Lib Dem) said: "This long delay has added to the workload for Solihull council and its officers, and that means extra costs."
Mr Burnham said casino operators had until the end of the year to voluntarily make payments to the Responsibility in Gambling Trust, which funds treatment for people with gambling addictions.
If they fail to comply, the Government would introduce new laws forcing them to pay a levy, he said.
Both Solihull and Wolverhampton councils will now be free to invite gaming firms to submit proposals for casinos.
Although Solihull is backing proposals for a casino at the NEC, which is also supported by Birmingham Council, there is no guarantee that this will be chosen.
The authority will have a statutory duty to consider any scheme on its merits, and a casino could be built anywhere in the borough.
Wolverhampton City Council has been backing plans for a "racino" at Wolverhampton Racecourse, but it will also have to consider other proposals.
Mr Burnham cast doubt on the supposed regeneration benefits of casinos, as he explained why the Government had scrapped plans for a supercasino, officially known as a regional casino, with 1,250 unlimited jackpot gaming machines.
He told MPs: "Regional casinos are likely to have no, or only marginal net benefits, compared with other means of economic and social regeneration."
The announcement is certain to spark a furious response in Manchester, where the city council had seen a supercasino as a way of regenerating some of the poorest parts of the city.
Mr Burnham announced instead that the Government would work with Manchester to identify a range of "regeneration alternatives".
Blackpool, which had also hoped to build the supercasino, will receive s100 million for education, s100 million for transport and s82 million for sea defences, the Government said.
There is no compensation for councils such as Solihull which also submitted bids for a supercasino. Solihull and Blackpool's bids were both rejected by an independent panel in January 2007, when Manchester's proposal was chosen instead.
Responding to the announcement, Ms Burt said: "I am very angry that they have held things up and dithered for months.
"What we have had is a huge waste of time and money. It has added to the workload of council officers, and construction costs have increased, pushing up the cost of the project."
But she admitted she was not convinced a casino would be right for Solihull. She said: "It depends on whether the benefits outweighed the costs.
"I don't like gambling, but there are potential regeneration benefits which might make a casino worthwhile.
"However, I am concerned that the Government doesn't seem to have taken into account the cost of extra policing that a casino will need, the need to provide help for people with gambling problems and the need to protect vulnerable people.
She added: "If Solihull does get a casino, there is no guarantee that it will be at the NEC."