  We present extensive multi-colour (UBVR_CI_C) photometry of the optical
afterglow of GRB 980519. Upon discovery, 8.3 hours after the burst, the source
was decaying as a power law, (t-t_GRB)^alpha, with a rapid decay rate alpha_1 =
- 1.73+-0.04. About 13 hours after the burst a steepening of the light-curve to
alpha_2 = -2.22+-0.04 was observed. Within the framework of current afterglow
models, we argue that the rapid initial decline, the `break' in the light
curve, and the spectral properties of the afterglow are best interpreted as
being due to a collimated ultra-relativistic jet of fixed opening angle
expanding into an inhomogeneous medium. In this scenario, we find that the
circumburst medium has a density structure that goes as r^(-2.05+-0.22). This
is characteristic of a preexisting wind expelled from a massive star. A
possible physical scenario is that the progenitor star collapsed to form a
black hole (i.e., a `collapsar'), producing the observed burst and afterglow.
However, the supernova signature expected in the light curve in such a scenario
is not detected. This either implies that the redshift of GRB980519 is greater
than 1.5 or that supernovae accompanying GRBs are not standard candles.
