The bid for a "Style City" super-casino at the National Exhibition Centre has emerged as a front-runner in an independent inquiry commissioned by the Government.
Blackpool, seen as favourite to win the competition for a regional super-casino, was ruled out of the race because it does not have enough space.
The conclusions are in a report from planning consultancy Roger Tym & Partners for the Office of the Deputy Prime Minister, although Government officials insisted no decisions had been made about where the super-casino will go.
The report says the planned number of casinos could be increased but also warns of associated problems, including crime, and "dramatic and negative" effects which might be irreversible in some areas.
It highlights Birmingham as a potential super-casino site, although it appears to refer to Solihull's plans for a facility by the NEC rather than rival proposals for a gaming complex at Birmingham City Football Club's proposed new stadium in Saltley.
It says: "Birmingham - here there is an established casino presence. There is current application for a regional casino close to the NEC, dubbed Style City."
Coventry was also highlighted, with the report saying: "Coventry - there is a current planning application for a regional casino on an edge of centre site, adjacent to a football club, in this Midlands city."
London, Manchester and Sheffield were also named as potential sites but the report warns Blackpool has "no space for a regional casino".
The Government is to allow only one regional casino at first, along with eight large and eight small casinos.
However the report, titled The Use Classes Order, Casinos and the Gambling Bill, predicts the Government will increase the numbers within three years.
It says: "The Office of the Deputy Prime Minister accepts that there may be scope for between 20-40 and operators estimate a demand for 25 regional casinos."
Birmingham and Coventry are supporting a campaign urging the Government to allocate more than one licence for a regional casino.
The report also warns that casinos, including the large and small casinos, could encourage crime and anti-social behaviour.
It says: "Proliferation may also result in enhanced socio-economic problems in terms of crime, anti-social behaviour and potentially alcohol.
"The effects of the initial proliferation could be dramatic and negative for many locations. It was thought that some of these initial effects might not be capable of easy reversal."
The findings were based on interviews with local authority officials, representatives from the casino industry and national Government officials.
A spokesman for the Department of Culture, Media and Sport said: "We appointed a panel last September to decide the location. This report will play no role in that decision."
A spokesman for the Office of the Deputy Prime Minister said: "This research report was written by independent consultants - its conclusions are not those of the Government."
Coventry City Council has formally submitted an application to the Government for permission to open a casino in a 90,000 square foot building at the Ricoh Arena, new home of Coventry City FC.
Solihull Council has come out in favour of a #250 million proposal at the NEC, while Birmingham City Council has yet to decide whether to back the Blues' #340 million proposal in Saltley. Alternatively, it could support Solihull's proposal.
Councils have been invited to submit bids for the licence to build a regional casino to the Government-appointed Casino Advisory Panel by the end of this month.
It will make a recommendation to the Culture Secretary by the end of the year. ..SUPL: