The Woden Tradies Union Club has been sold for $16 million to local developer Geocon.
Staff at the cash strapped southside club were told of the sale on Thursday morning.
The club is expected to close its doors in January next year.
Woden Tradies chief executive Rob Docker said the club had struggled to break even for the past five years due to increasing competition from nearby clubs.
Tradies chief Rob Docker called the sale "a heartbreaking decision".
"It's a heartbreaking decision but the commercial reality has become too much," he said.
"This is not something we do lightly but the reality is that the club is not financially viable and we have a clear accountability to our members to be financially responsible in their best interests."
Geocon will continue operating the hotel while plans for a high-rise, mixed-use precinct are developed.
Managing director Nick Georgalis said the one-hectare site bounded by Launceston Street, Melrose Drive and Furzer Street presented an "excellent opportunity for a Geocon trademark precinct-style development".
"With last year's announcement that the next phase of the light rail will extend south from the city to Woden, this town centre has great appeal for us," he said.
"We are excited about what Geocon can bring to the Woden precinct.
"While the sale will be finalised next year, a new project in this location aligns with our commitment to meet the increasing demand for quality apartments in Canberra."
The transformation of the Tradies site will be Geocon's second project in the Woden Town Centre.
The developer also transformed Juliana House, a former public service building, into the 152-room Abode Hotel - Australia's first Green-Star-rated hotel.
The Woden Tradies site has multiple development applications applied to it after the club paid for lease variations and amalgamated the whole block when it explored self-development of the land.
"Over the years at a substantial cost the club has deconcessionalised and paid lease variation charges at market value determined by independent valuations," Mr Docker said.
The club said authorisations and gaming machines would be held, sold or transferred to the Dickson Tradies.
It said it had not considered selling any of the poker machine licences to the casino.
The club was first opened in 1969 to serve Canberra's southside after the success of the Dickson Tradies, which opened in 1964.
Mr Docker hoped many of the 10,727 members would transfer their membership to the Dickson Tradies.
However, members also have the option to have fees refunded or transfer their membership to the nearby Hellenic Club.
The majority of staff are casually employed and Mr Docker said many, if not all, would be offered similar jobs at the Dickson Tradies.
Although, he said some permanent club employees could be offered redundancies if suitable jobs were not available in Dickson.
He said some hotel staff could also work for the new owner.
Mr Docker said all staff would be offered a wide range of training and support, including career counselling and guidance, professional support for preparing CVs, jobs applications and interview preparation.
"As a union and community-based organisation that has a proud history of fighting for a fair go for all of our members, our primary focus right now is looking after the interests of the wonderful staff employed at the WTUC," Mr Docker said.
"While the majority of workers are casually employed we want everyone to secure the best outcome to suit their circumstances."