Top Rank chairman Bob Arum, who promotes Pacquiao, had initially made the deal with Duco for the fight to take place in Brisbane. He has told ESPN's Dan Rafael that Pacquiao won't be fighting in Australia.
"The Australian deal is not going to happen now, because Manny is trying to get a fight done in the United Arab Emirates and the people there favor him fighting Amir Khan," Arum said.
Arum said the UAE was offering US$38 million to host the fight, nowhere near a price that Duco and the Queensland govenment could match.
"Whether it will happen or not, I just don't know, because they have to come up with a large amount of money," Arum said. "Manny seems to believe they will come up with the money. I have some reservations whether it will happen or not. If the money comes up, I will aid and abet the fight happening. But right now, I'm holding my powder. I don't really know."
Pacquiao asked his Twitter followers earlier this month who he should fight next out of Horn, Khan, Terence Crawford and Kell Brook.
Horn was a clear last on 7% after more than 44,000 votes, with Amir Khan (48%) ahead of Brook (24%) and Crawford (21%).