The "Beat It" singer had reportedly been planning a spectacular resident live show at a major hotel in the city to stage his pop comeback, but has now dropped out of the proposed project with no explanation.
Las Vegas entrepreneur Jack Wishna told the Las Vegas Review Journal newspaper: "I had Jackson on the telephone when he was in Ireland and he was very excited about working in Las Vegas. It even got down to the detail of a statue of himself that he wanted out front."
"He also came up with the idea of having his own slot machines. I have a signed contract that he wanted us to put together to market his slot machines in Europe and Asia."
It was previously reported that plans were underway for a 50-foot robot replica of Jackson, which could shoot laser beams from its eyes, to be erected in the desert to promote his residency.
Jackson and his team have refused to comment on Wishna's comments.
The singer's spokeswoman Raymone K. Bain also denied rumors he had been evicted from his 10-bedroom suburban Vegas mansion, insisting he has simply decided not to renew his lease.
She said: "He loved the house but decided to allow the lease to expire because of concerns that security wasn't sufficient."
