The legislation lost on a 35-35 tie vote after about six hours of debate.
The defeat of the legislation was a blow to Indian tribes and to gambling interests that had hoped to get a bill through the Legislature before it adjourns Saturday.
The bill would have legalized Indian casinos and allowed slot machines at race tracks and at veterans' and fraternal clubs.
The casinos being operated now by 11 tribes have been ruled illegal by state and federal courts. But they continue to operate under a court stay. Unless new compacts are enacted, the casinos could be forced to close.
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