Toronto city council has overwhelmingly voted no to a massive new downtown casino, shutting the door on a year-long debate that featured a parade of ambitious plans and a citizen-led campaign against them.

In an unexpected move, council also rejected plans to expand the gambling floor at Woodbine Racetrack, a narrow result that left the site's operator concerned for its future. However, council went on to vote in favour of pursuing discussions with the provincial and federal governments to expand the amount of convention space in the city, news that will be welcomed by those who say Toronto is lagging behind other North American destinations.

Nick Eaves, chief executive of Woodbine Entertainment Group, which operates the north Etobicoke site, watched the vote along with about 200 of his workers, who bussed in to city hall.

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In addition to the support from workers, Woodbine had a petition with 10,000 signatures, he said. "For all of that to be unnoticed and to be turned down today is a real shock," he said.

Councillor Mike Layton, who led the charge to have the special meeting even after Mayor Rob Ford declared the casino plan effectively dead last week, put forward the motion to oppose the downtown site. It passed 40 to 4. Mr. Layton also asked council to oppose expansion in the area that includes Woodbine, which passed in a 24-20 vote. Earlier in the meeting Mr. Ford attempted to get support for a compromise that would see expanded gambling at Woodbine. That motion failed 13 to 31.

Mr. Eaves said the prospect of a new casino now going to neighbouring Vaughan or Markham would "severely compromise" Woodbine's ability to compete. He said he hopes to work out a deal with the province to keep Woodbine operating.

Oxford Properties Group, which in 2011 acquired the land under the Metro Toronto Convention Centre's north building, has been advocating for a casino on Front Street to help fund the convention centre's expansion.

Michael Kitt, Oxford's executive vice-president, said in an interview that the company supports the city's decision. He said Oxford was encouraged by the discussion that arose at Tuesday's meeting. Council unanimously voted in favour of pursuing discussions with Queen's Park and Ottawa to invest in additional convention space.

"We think that's an important topic to continue the momentum over the coming months," he said.

Tuesday's highly anticipated casino vote, held at a special meeting called by a majority of councillors over Mr. Ford's objections, was overshadowed by recent allegations the mayor was caught on video smoking crack cocaine.

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During the council debate, Mr. Ford – who for months was one of the casino's most vocal supporters because of the jobs and revenue he said it would bring – spoke out against a downtown casino and laid the blame at Premier Kathleen Wynne's feet.

"No deal is good enough for this Premier," Mr. Ford told a packed council chamber. "She doesn't want a casino in Toronto. No one knows which direction she's going on the gaming file."

The City of Toronto had originally counted on collecting $100-million annually for hosting a casino, but that came crashing down after The Globe and Mail reported that would mean a special deal for Toronto. Ms. Wynne told the Ontario Lottery and Gaming Corp. to give all municipalities the same deal, and the new funding formula would see Toronto get a little more than $53-million a year for the downtown site.

Las Vegas-based MGM Resorts was among those to express interest in Toronto and, according to city lobbyist records, was the most aggressive of the potential casino operators.

Alan Feldman, MGM vice-president of public affairs, in a written statement thanked council for carefully considering the opportunity.

"As we have always said, we only want to operate in a city where we can partner with the local community," he wrote. "For this reason, we are excited to continue the process and remain committed to sharing our vision with a willing host in the greater Toronto area."

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Mr. Feldman did not respond to an e-mail asking why the casino pitch didn't work in Toronto.

Jan Jones, of Caesars Entertainment, which had also expressed interest, wrote in a statement that she was "disappointed" by the vote, but respected council's decision.

Peggy Calvert, one of the founding members of citizens' group No Casino Toronto, said she was "delighted" by the result.

"We couldn't be more ecstatic. … We could only hope way back when that this would be the outcome," she said.