For developers AEG, Greenwich Council and business leaders, it’s a blow to regeneration plans for the borough.
The 02 once known as the Millennium Dome was along with Blackpool thought to be odds-on favourite to win the regional license.
Local anti-casino campaigners however breathed a collective sigh of relief.
The independent Casino Advisory Panel decided Manchester would be a more suitable place for a Las Vegas style resort casino - 5,000 square metres in size and with 1,250 unlimited-jackpot slot machines.
Chair of the Panel, Professor Stephen Crow declared: “Manchester represents a good place to test social impact, and the council's consultations with other local authorities and relevant bodies gave us confidence on that.
"Manchester has a catchments area for a casino second only to that of London, and it is an area in need of regeneration at least as much as any.”
Manchester is one of England’s eight “Core Cities” which Government policy sees as drivers of national and regional economic growth.
In front of the Pilot Inn in Greenwich, the country’s media gathered to wait for the result.
Anti-casino campaigners listened to the breaking news from BBC London 94.9 FM.
Rachel Mahwood from the South And East London Against The Casino exclaimed: “I am relieved but I don't think the fight is over. We need to look out for what AEG will do next.
“Its good news for Manchester if that’s what the people really want.”
Fellow campaigner Chris Le Breton added: “Local people in Greenwich never wanted the casino. We want to see a green sustainable space at the Dome that can educate and inspire- not just a place to gamble.”
The Greenwich Peninsula Chaplaincy will have a base at the 02 but the multi-faith group were against a casino.
"The Chair of Trustees, the Rev’d Mike Leader said: “The Greenwich Peninsula Chaplaincy, whilst being relieved that a regional casino is not to be built in Greenwich, regrets the Casino Advisory Panel’s recommendation that a regional casino should be located in Manchester.
"Opportunities to gamble don't serve human well being but rather risk damaging the lives of individuals, families and communities.
"We therefore encourage the Secretary of State for Culture not to establish a regional casino in Manchester or anywhere else.”
The casino was due to form just 8 percent of the entire space inside the arena. But financially it was a crucial 350 million out of a 600 million pound investment by entertainment moguls AEG.
They are already constructing a 23,000 seater music arena, nightclub, bars and restaurants which will open in July.
The casino would have had two hotels attached to it and promised 6000 jobs. According to the bid proposal, the casino was estimated to generate £103 million, with the majority of visitors being Londoners.
Steve Nelson, Chairman of the Greenwich and Bexley Chamber Of Commerce told BBC London: “It is bitterly disappointing for the borough. Greenwich needed the casino and the casino needed Greenwich.
“South East London will now miss out on new hotels and tourism.”
David Campbell, President and CEO of AEG Europe said:
“We are very disappointed that the London Borough of Greenwich has not been recommended as the location for the first regional casino. We are taking time to examine the findings in full and considering our position.”
The Leader of Greenwich Council, Cllr Chris Roberts declared: “I would like to congratulate Manchester on the success of their bid and wish them every success for the future. I would also like to pay tribute to the casino advisory panel for their hard-work and commitment to the process.”
In a previous interview with BBC London just a few weeks, Chief Executive of the 02 Philip Beard simply said: “We don't have a plan B.”
The panel did recommend a license however for London- a large casino north of the river in Newham.
The location could be in either ExCel centre in Docklands, Stratford Town Centre or West Ham United Football ground which already has a hotel connected to it. It will be 1,500 square metres have 150 slot machines with a maximum jackpot of £4000.
For some the Dome's bid was tainted by the involvement and subsequent scandal of Deputy Prime Minister John Prescott and his visit to the home of AEG boss Philip Anschutz.
Greenwich Conservatives’ Culture spokesman Cllr Nigel Fletcher said: "The curse of the Dome has struck again. This result confirms our worst fears, and leaves a gaping hole in plans to regenerate North Greenwich.
“I’m angry that Greenwich has paid such a high price today for Labour’s clumsy mishandling of this process. Our bid was badly tainted by suspicions that not everything was above-board or that it was a done deal. John Prescott and other ministers must take a large part of the blame for that, along with the Labour council.”
Labour MP for Greenwich and Woolwich, Rt Hon Nick Raynsford however said: "I think the panel kept focused on the principals. There was a lot of scare mongering and misinformation around. "
He added: "I am disappointed Greenwich was not recommended but I don't believe it will damage the regeneration of East Greenwich."
Culture Secretary Tessa Jowell told the House Of Common there would be no more casino licenses considered in this Parliament.
"There will be no Las Vegas tricks of the trade," she insisted.