Ministers are picking through the bones of the government's super-casino proposal after it was narrowly rejected by the Lords.
The defeat, by just three votes, came only moments before MPs voted by a majority of 24 to back the proposal, and it throws a huge question mark over the entire scheme.
Defeated Culture Secretary Tessa Jowell had attempted to placate rebels in both houses by accepting a proposal to create a committee to reconsider the process by which Manchester had been selected.
But she appeared to suggest the committee could not reconsider the Manchester choice - and so failed to persuade peers.
Speaking after the votes she repeated her earlier warning there was no "plan B" and that the whole package had, in effect, been sent back to the drawing board.
She will now have to decide how to proceed with this controversial measure but has ruled out any new proposals before the local and regional elections in May and there will be real fears Manchester may yet lose the casino.
The future of 16 smaller casinos in other towns across the country is also now in doubt, even though it is widely accepted they would have been voted through both Houses if not tied to the super-casino.
Added concern
The government defeat came after peers opposed to the idea of super-casinos in principle, led by bishops, joined with those angry at the way the decision to award the facility to Manchester had been handled.
It was particularly embarrassing for the government because the issue in front of peers and MPs was only a piece of secondary legislation - a procedure that gives effect to details of an act previously passed by parliament.
The Lords traditionally do not vote down such legislation and have only done so twice in the past 40 years - in 1968 on sanctions against Rhodesia and in 2000 over election expenses for the Greater London Authority.
The original casinos act had been passed by peers, and ministers might have felt the secondary legislation would also be passed. But it was the added concern over the way the selection procedure had been carried out that appears to have ensured the defeat.
However, the narrowness of the vote in the Lords may just strengthen Ms Jowell's hand should she decide to insist that the elected Commons should get its way.
Manchester MP Graham Stringer has already insisted ministers should now impose the Commons' view, and warned this was now a constitutional matter over the relative powers of the two houses of parliament.
Refused to budge
Ms Jowell knew she was playing for high stakes over this controversial policy and there have even been suggestions her future career might be at stake.
She will be able to draw some comfort from the fact that she did enough to satisfy MPs and that it was unelected peers who refused to budge.
Immediately after the votes, she said ministers would now have to "reflect" on the votes before returning "in due course".
But some were speculating that the whole affair will now fall to the next prime minister to sort out, and Gordon Brown is nowhere near as enthusiastic about the policy as other ministers.
However Manchester and Blackpool - which many believed should have won the casino - are not going to want to see any lengthy delay.
Similarly those regions expecting the smaller casinos will not want a delay and it may be that Ms Jowell attempts to separate that proposal out from the super-casino proposal and push it through parliament quickly.
The bottom line, however, is that there is now a major doubt over the future of this policy.
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