A decision to back the NEC super-casino was based on flawed legal advice, Birmingham City Council has admitted.
The council cabinet decided to support the NEC after being told that any move by the Government to increase the number of super-casinos in the country from one to eight would require fresh legislation.
The whole selection process would have to start again, enabling the council to enter two bids - one for the NEC and one for a rival scheme by Birmingham City FC.
The advice was based on a misinterpretation of the law, the cabinet was told yesterday.
The Gambling Act actually allows the Secretary of State to increase the number of super-casino licences through an Order in Council and would not require primary legislation. If that were to happen, the existing selection process would continue and it would be too late to enter a fresh bid on behalf of Birmingham City.
Sir Albert Bore, leader of the Labour opposition group, said he was dismayed that such an important decision had been based on incorrect advice.
Sir Albert (Lab Ladywood) added: "We were told that Birmingham would not be adversely affected if we got to a position where the Government increased the number of casino licences.
"If, as the legislation does stipulate, it is simply a matter for the Secretary of State to amend I can only presume that only those local authorities that have put in a casino bid would be considered for the additional licences."
Council leader Mike Whitby said the legal hiccup would have made no difference to the cabinet decision. The NEC case remained the strongest.
Coun Whitby (Con Har-borne) said it remained far from clear whether the Government would be able to force through an increase in the number of super-casino licences. Approval of both the House of Commons and the House of Lords would be required, he added.