Stranraer has been named as one of 16 UK locations granted approval for a resort casino, sparking hopes it could emerge as a leading marine leisure destination.
The announcement comes as the Westminster Government ditched plans for a Las Vegas-style casino with an unlimited jackpot in Manchester over fears of the social cost of gambling.
The U-turn has occurred 13 months after Manchester fought off competition from Blackpool, London's Millennium Dome and Glasgow to win the right to host the UK's first "supercasino", with Culture Secretary Andy Burnham insisting there was "no consensus" over whether the attraction should be built.
However, he confirmed 16 smaller venues will go ahead in towns across the country, the destinations being the same as those recommended by the independent Casino Advisory Panel last year.
Stranraer is the only Scottish town on the list. Small casinos will also be built in East Lindsey, Bath, Luton, Scarborough, Swansea, Torbay and Wolverhampton, with larger venues in Great Yarmouth, Kingston-upon-Hull, Leeds, Middlesbrough, Milton Keynes, Newham, Solihull and Southampton.
The announcement ends months of uncertainty for Stranraer, which had been pinning its hopes on the casino and a waterfront redevelopment at Loch Ryan, especially with the ferry terminal due to move further up the loch to Cairnryan.
With the supercasino option dead, it is understood Glasgow's will not seek any of the smaller alternatives.
Dumfries and Galloway Council is hoping the casino will bolster links across the North Channel.
The local authority said it will now need to study the statement from the minister to fully assess what is required before taking the proposal to its planning and licensing committees.
It also said it was assessing the potential impact of gambling on visitors to the casino.
A spokeswoman said: "We welcome the clarification of the situation on casino licensing. The regeneration opportunities which might follow are considerable, particularly through inward investment from players in the leisure industry across and beyond the UK.
"Being the only potential licence in Scotland affords the project a tremendous competitive advantage at a UK level and beyond. We are already working with Irish and Northern Irish colleagues on a new EU-funded co-operation programme and we know there are real opportunities at this level, too.
"It has always been stressed by the partners that the plans are not just about a casino. They are about the regeneration of the Stranraer/Loch Ryan waterfront and the transformation of Stranraer from port town to top quality marine leisure destination."
Russell Brown, the Dumfries and Galloway Labour MP, said: "This announcement now paves the way for a local debate on whether a casino would provide the boost to the local economy, and a kickstart for the waterfront regeneration plans, which are both so urgently needed.
"It is essential that the council does deliver on its promise of full consultation, and then goes forward only on the basis of the overwhelming view of local people."
Announcing the U-turn, Mr Burnham said there were "important differences" between a supercasino, with 1,250 unlimited stake and jackpot machines, and the 16 approved casinos, which are still considerably larger than current casinos.
Mr Burnham said that the UK would have the "toughest regulatory regime for gambling in the world", with casinos closing for at least six hours a day, a ban on credit cards and no free drink promotions.
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