THREE North-East councils are locked in a race to build the country's first Las-Vegas style "super-casino" offering unlimited jackpots, it was confirmed today.

Middlesbrough, Newcastle and Sunderland are among 27 councils bidding to open a so-called "regional" casino, boasting up to 1,250 slot machines.

Local authority leaders believe the development - attracting gamblers from across the region and beyond - will be a moneyspinner to regenerate struggling areas and boost employment.

Middlesbrough, for example, hopes to create 2,000 jobs and attract 150m of investment by transforming Middlehaven, the town's former docklands area.

But just one licence is up for grabs, with Blackpool and London long thought of as the favourites in a contest to be decided at the end of the year.

The government was forced to abandon plans for up to 40 regional casinos after a Commons revolt, amid warnings that the number of gambling addicts would rocket.

Critics have also poured scorn on the idea that a casino can "regenerate" an area, warning it would instead suck the life out of local businesses.

For example, the casino - with a customer area of up to 5,000 square metres - can invite a major bookmaker to set up inside and also run bingo games.

Professor Stephen Crow, chairman of the government's Casino Advisory Panel, said the applications would now be whittled down to a shortlist, a process that could take up to eight weeks.

He added: "Once we have completed this initial phase of evaluation, selected proposals will then go forward for further examination over the summer months."

There has been speculation that the Conservatives will strike a deal with the government to allow possibly eight "super-casinos" - which would suggest one in the North-East.

But Hugo Swire, the Tory culture spokesman, said yesterday: "The impact on problem gambling and the social effects remain unknown.

"This is why the government must stick to its promise to a pilot project of one regional casino, so that we can properly assess both the regenerative and the social impacts of regional casinos."

The Salvation Army warned the inevitable rise in problem gambling from a super-casino was "far too high a price to pay for economic regeneration.

Spokesman Major Bill Cochrane said: "Research from other countries shows super-casinos can lead to a range of social problems, including increased debt, loss of employment, family breakdown and increased crime."

Separately, South Tyneside, Harrogate and Scarborough are among 41 authorities bidding to open smaller casinos, offering a 4,000 jackpot.

Eight licences are on offer for a "large" casino, with up to 150 gaming machines, and a further eight licences for a "small casino, with a maximum of 80.

It is likely only one of the North Yorkshire applications will succeed, because the government is insisting on a "good geographical spread" of casinos.