The governor had floated the plan for a state-run casino at or near the Mall of America during the fall campaign.
He will release his proposal to fill in a $6.2 billion deficit on Feb. 15.
"I don't expect to have any gaming in my budget," he said.
During the campaign, Dayton, a Democrat, floated the idea of a state-operated casino at or near the Mall to help close the budget gap. His plan, released in September, included $300 million from a new casino.
But on Tuesday, he said a new casino "wouldn't have any impact on the biennium."
The word from the governor that he would not rely on casino revenue may give Indian tribes who provide gambling interests a sigh of relief. But it will give those who have pushed for more casino cash in the state's bottom line a reason to groan.
Using gambling money to help solve the state's cash problems has long been a hot topic at the Capitol.
In 2005, then-Gov. Tim Pawlenty proposed that the state's most successful Indian tribes share revenues with the state. But the idea stalled, as tribes protecting their interests, liberal DFLers and conservative Republicans all opposed it. The Republican governor appeared gambling-shy thereafter.
John McCarthy, executive director of the Minnesota Indian Gaming Association, said he is pleased Dayton will not rely on gambling money in his budget proposal, but said, "It is just one hurdle. This is far from over."
Whether Dayton will propose or accept another gambling plan in the future is unclear.
Dayton said he has been spending six to eight hours every day this week figuring out how to fill in the $6.2 billion hole. "It's just a very challenging process, but I will come out with a balanced budget two weeks from today," he said on Tuesday.
Rachel E. Stassen-Berger • 651-292-0164