The NSW government had proposed to buy Rosehill Racecourse in densely populated western Sydney in a potential $5 billion deal and turn the 140-year-old track into a "mini-city" of about 25,000 homes.
But despite being backed by executives of the Australian Turf Club, which owns the site, more than 55 per cent of the club's 11,000 members voted against the pitch on Tuesday evening.
Disappointed Premier Chris Minns would not be drawn on a "Plan B" after the failure.
He has stayed tight-lipped on any concrete announcements arguing that "bold ideas for housing in NSW" were still necessary.
"It would have been good for Sydney but I don't regard it as humiliation," he told parliament on Wednesday."We can't just take the safe option, we can't just take the sure bet."
Planning Minister Paul Scully was asked on other potential development sites such as Canterbury Racecourse, Glebe Island Port and Moore Park Golf Course.
He said there are broader plans for transport-oriented development to increase density around train stations and to build on vacant crown land."It's no secret ... I've announced it with the premier multiple times," Mr Scully told parliament.
Western Sydney Leadership Dialogue chairman Chris Brown called for an ambitious redevelopment of the 430-hectare Sydney Olympic Park precinct turning it from an events-based destination to an "integrated, connected and liveable city."
"It should be Australia's first high-rise suburb, with thousands more homes surrounded by parklands, smart jobs, universities and tourism attractions," he said.
Brett de Vine, the turf club's spokesperson, said plans to sell land near the racecourse to stem its financial losses could be revived again after the vote but noted it would be an "open-ended exercise".
"There are parcels of land around Rosehill Gardens that potentially could be sold to developers, he told AAP.
"But they wouldn't reap anywhere near the amount of money that the $5 billion (government) acquisition would have would have secured."
Outspoken Liverpool Council mayor Ned Mannoun pitched his local government area as the site for "one of Australia's most significant urban renewal projects" after the Rosehill debacle.
"With the stroke of the premier's pen, Moore Point and surrounding precincts could unlock up to 20,000 new homes — a transformative opportunity for western Sydney," he said.
"We can have shovels in the ground this year to begin construction of the first 1000 homes, with families moving in by 2027.
"This is a real, tangible solution — and it's ready to go."
