THE city council faces a massive legal bill for its efforts to block plans for a casino.

The project has been revived by one of the UK's biggest casino operators and a sheriff has condemned licensing chiefs for rejecting the original application.

It is understood the council's legal bill could run to up to £50,000, although both sides declined to comment ahead of a meeting next week.

Sheriff Gordon Liddle stopped short of granting Grosvenor the casino licence for the site, at the former Palais de Danse in Fountainbridge, and the licensing board will discuss the application on Monday.

Grosvenor's sister company, Mecca, won permission to knock down the building beside the Union Canal in June and replace it with a casino. But licensing chiefs have refused Grosvenor a licence three times on the grounds the city has enough gambling dens.

However rival operator Stanley was granted permission for a casino on the site of a former nightclub at nearby Fountain Park, which opened this summer. Grosvenor mounted a fresh appeal to Edinburgh Sheriff Court after its most recent application was rejected last October.

Company representatives had told the licensing board that gaming enthusiasts were seeking higher standards of facilities than were on offer in the city and that the board had accepted that argument in granting Stanley's application for Fountainbridge.

Grosvenor's lawyers argued Edinburgh could not be considered to be "over-provided" for in terms of casinos because it had only five, compared with eight in Glasgow and four in Aberdeen.

In his ruling, Sheriff Liddle said: "I am entirely satisfied that the defenders were wrong in law to dismiss the question of competition as irrelevant and I uphold the appeal."

The sheriff said he had decided "with some hesitation" to refer the case back to the licensing board, despite having the power to grant the licence. He added: "It would be better were there to be a differently-constituted board to reconsider the application."

However, local councillor Andrew Burns said: "I would certainly not welcome another casino in the Fountainbridge area, because of the close proximity of the existing one. It would be totally inappropriate."

A spokeswoman for the city council said the costs involved in the case to date were still being calculated. She added: "The new board will consider the application on its merits, which is the same basis as the previous board, at their meeting on Monday."