"If you want to start a run on forum shopping for casinos, this is going to be the first bill that does it," said Rep. John Conyers, a Detroit Democrat.

Supporters said they were simply settling a century-old land claim from the tribes to make amends for the state's failure to protect tribal land more than a century ago. In a state with an unemployment rate of 8.5 percent, the vote was a blow to Romulus and Port Huron, which stood to gain thousands of jobs in the deal.

"We will continue to fight to resolve this illegal land-taking and bring thousands of much-needed jobs to our state," said Aaron Payment, chairman of the Sault Ste. Marie Tribe of Chippewa Indians.

Gambling opponents joined with Nevada gaming interests such as MGM Mirage, which operates a Detroit casino, and some tribes to beat back the measure. The Saginaw Chippewa Indian Tribe, which runs one of the nation's largest tribal casinos in Mount Pleasant, was among the opponents.

Nevada lawmakers joined the Michigan fight after being lobbied by MGM Mirage, whose casino would have faced competition from new Indian gaming.

All three Nevadans in the House voted to kill the bill. Reps. Shelley Berkley, D-Nev., and Jon Porter, R-Nev., actively worked against it.

Likewise, Rep. Dean Heller, R-Nev., tried to put together an amendment to prohibit gaming on newly acquired tribal land, but it was not allowed by the House Rules Committee.

Porter said the bill "authorizes an unprecedented expansion of off-reservation gaming. Never before has a U.S. Congress been in the business of deciding whether a community should and can't have a casino."

Berkley said the bill was based on "a bogus land claim" that had been rejected in the courts. If passed, the bill would "offer a blueprint to any Indian tribe that wants to circumvent the laws regulating Indian gaming," Berkley said.

The Sault Ste. Marie Tribe of Chippewa Indians and the Bay Mills Indian Community reached agreements in 2002 with Michigan officials to take land in Romulus and Port Huron, respectively, and build off-reservation casinos.

Supporters noted that both former Gov. John Engler, R-Mich., and Democratic Gov. Jennifer Granholm backed the deal and the two communities hoped to welcome the facilities.

The Interior Department had registered its opposition because it did not follow the typical process for land to be taken into trust for a tribe, arguing that it appeared to circumvent the tribal-state compact approval process by bypassing the state Legislature.

Detroit lawmakers such as Conyers and Democratic Rep. Carolyn Cheeks Kilpatrick said the new casinos would have undercut three state-licensed casinos in the city and threatened attempts to revitalize the city. The three casinos employ nearly 8,000 and have generated more than $1 billion in revenue.

Supporters of the bill said Nevada gambling interests and other tribes simply feared additional competition. Indian casinos took in about $26 billion in gambling revenue in 2007 while Nevada casinos hauled in $12.85 billion in gambling revenue last year.

"Their opposition is not based on ideology," said Rep. Candice Miller, a Republican from Macomb County.

Even if the bill had succeeded in the House, it would have faced an uncertain future in the Senate, where Majority Leader Harry Reid, D-Nev., had expressed opposition.

Washington Bureau Chief Steve Tetreault contributed to this report.