VANCOUVER - Vancouver city council rejected a provincial proposal to build the largest casino in Western Canada in the city's downtown and slapped a moratorium on any future plans to expand gaming.

City hall chambers were packed to overflowing Tuesday as the divisive debate headed toward a final vote and Mayor Gregor Robertson spoke out against the casino.

In the end, council agreed the negative impacts of increased gambling addiction and crime simply outweighed the potential benefits of more revenue and jobs.

Robertson said allowing the 74,000-square-metre entertainment complex "doesn't fit with Vancouver's global brand as the world's most livable city, as the green capital of the world, as a hotbed for innovation in clean and digital technology, in resource management.

"I personally do not believe the expansion of gambling is the right direction for Vancouver," he said to cheers from those in the gallery.

The casino project, first proposed by the provincial government a year ago, has whipped up division between those who object to expanded gambling and developers and union members who were in favour of the project.

But Robertson urged council to put the brakes on expanded gambling.

He said no new projects should be considered until the B.C. Lottery Corporation has done a thorough consultation with the city and has implemented internationally recognized best practices.

Public hearings on the $500-million proposal began in February.

The plan by Paragon Gaming would initially add 1,200 slot machines to an existing casino, with room for 300 more as well as 150 table games. Two hotels would also be built on the BC Pavilion Corp. site next to the downtown BC Place Stadium.

Business groups tout new revenues for the city and the province, along with an influx of new jobs, while a coalition of opponents argue the casino would bring with it a host of problems from increased gambling addictions to organized crime and money laundering.

"It's not in keeping with the inspired use of public lands that have made Vancouver the most livable city in the world," said Sandy Garossino, a city business woman who co-founded the group "Vancouver Not Vegas."

Garossino cited Stanley Park, the seawall and Granville Island as "the bar" that has been set for developments.

"A massive casino the equivalent of two football fields of gaming space and 1,500 slots machines does not meet that standard," she said.

While the project was announced by the provincial government last year, the city decided to consult with the public over whether it should give its support in the form of rezoning, which is the subject of Tuesday's vote. Along with holding about eight public meetings, the city has received 1,027 letters in support, and 719 letters in opposition. If approved, the complex would aim to open in 2013.

Both the Vancouver Board of Trade and the downtown business improvement association have submitted endorsements.

In its letter, the board cites the project's potential "incumbent benefits in investment, local employment and positive economic impact." The letter from the business improvement association notes its support "after considerable deliberation."

The association's letter estimates the project would created as many as 1,900 direct full-time jobs once operational and another 1,600 indirect jobs. It would also draw new visitors to the downtown and those tourists would likely spend time in other parts of the core such as the entertainment district.

It also favoured Paragon's commitment to continuing sponsorship and donations for local arts and cultural organizations.

But the association noted several potential challenges, including public safety needs and not enough public transit to support the expansion.

The most vocal opposition comes from area residents, including more than 100 community activists, business people, academics and doctors who included their names on a petition organized by "Vancouver Not Vegas" that has garnered more than 4,000 signatures.

That includes a group of 18 retired police officers who urged council not to approve the expansion.

"Casinos and racetracks are well known for their vulnerability to the activities of gangs and organized crime, money-laundering, loan-sharking, extortion, and prostitution, as well as for the vulnerability to public corruption which they engender," says the letter.

A report to council from the city's medical health officer also warned that problem gambling could rise with the expanded facilities. John Carseley noted the project's close proximity to the Downtown Eastside, an impoverished area of the city with a high population of drug addicts.

A city report projects annual revenue from the expanded casino at upwards of $275 million a year, with the city's share at about five per cent and an estimated 50-per cent cut for the province.