Well, it's certainly depressing to know that a game based on Gotham by Gaslight that was once in development is now cancelled.
Day 1 Studios, which developed F3AR and Fracture is reported to have been working on a Batman game set in a 19th century Steampunk Gotham, with the Gotham by Gaslight spinoff series as its source material. In the game, the Dark Knight would've tracked down Jack the Ripper, who's now destined to escape unless the project somehow resurfaces with new backing.
The game was reportedly developed as a pitch for the Xbox 360 and PlayStation 3 with THQ as its publisher. But THQ rejected the game and thus, so the game was never made.
A source at Day 1 Studios who worked on the project leaked out a video presentation of the gameplay prototype, which you can see above.
Source: Siliconera