The assembly of a western Japan prefecture on Wednesday voted down a bid by its government to host a casino resort, leaving now only two other candidate sites and dealing a further blow to the country's plan to stimulate the economy through the gambling industry.

The rejection by the Wakayama prefectural assembly is the latest sign of lost momentum in the central government's push to construct so-called integrated resorts comprising a large hotel, conference rooms and gambling areas.

The project had already been shaky due to a graft scandal involving one of the key politicians, COVID-19 pandemic-induced procedural delays and withdrawals of foreign operators since Japan legalized casinos in 2018 as part of efforts to boost tourism and regional economies.

Under Japan's law, up to three casino resorts are allowed. With Wakayama out of the race, only Nagasaki Prefecture, the city of Osaka and Osaka Prefecture -- backed by their assemblies -- are expected to submit formal applications to the central government for the right to host a casino resort in the 2020s.

Yokohama, near Tokyo and the second-largest city in Japan by population, withdrew its bid last September due to concerns about gambling addiction and the deterioration of public safety.

The Wakayama assembly had to approve the bid before it was sent to the central government by April 28. Wednesday's vote saw 22 members against the plan and 18 in favor, amid concern over whether the prefecture neighboring Osaka can secure the initial investment of about 470 billion yen ($3.7 billion).

Wakayama Gov. Yoshinobu Nisaka told reporters the rejection came as "a bitter blow" given the work put into making the plan the "ultimate jumpstart" for the prefecture's economy.

The envisaged resort on an artificial island in the city of Wakayama was to have attracted about 6.5 million visitors annually, with an estimated economic impact of around 350 billion yen.

Clairvest, a Canada-based IR investment company, was to mainly start operating the resort possibly in the fall of 2027.

Nagasaki Prefecture, whose assembly approved the bid Wednesday, has teamed up Casino Austria International Japan to build a casino resort on the site of Huis Ten Bosch, a theme park in Sasebo. The economic ripple effect is estimated at around 330 billion yen a year.

Meanwhile, the Osaka prefectural and municipal assemblies approved last month a plan to build a casino resort on Yumeshima, an artificial island in Osaka Bay, in partnership with MGM Resorts International and Orix Corp. The project is estimated to bring around 1.14 trillion yen annually in total economic benefits to the Kinki region centering on Osaka Prefecture.

Japan's top government spokesman Hirokazu Matsuno said at a press conference Wednesday he would "refrain from commenting on the situation of individual local governments" but stressed that "IRs are an important initiative for Japan to become a developed tourist destination."

The Japanese government originally planned to accept formal applications from candidate sites starting in 2021 but postponed the proceedings due to the pandemic.

The situation was also exacerbated by the 2019 arrest over a graft scandal and conviction later on of Tsukasa Akimoto, a former ruling party lawmaker who was active in making casinos legal in Japan.

Pandemic-hit foreign casino operators have also pulled out from making a foray into the Japanese market, touted by global casino operators as one of the potential countries for opportunities to expand. Among them was Las Vegas Sands Corp.

The casino project has also sparked concern over gambling addiction. As countermeasures, the government has decided that people living in Japan will be charged a 6,000 yen entrance fee for casinos and the number of visits restricted, while foreign visitors can enter free of charge.