Jay-Z Backs Out Of Casino/Racetrack Deal

The controversial plan to open 4,500 casino slots at Aqueduct Race track in which Jay-Z was to be a partner in is falling apart.

Yesterday (March 10), New York's Gov. Paterson wrote a letter threatening to kill the deal with AEG to open 4,500 casino slots at Aqueduct race track in Queens.

In the letter, Paterson's office has stated that he will “disqualify” winning bidder AEG.  In response to the letter, powerhouse Queens Minister Floyd Flake responded by resigning as a partner in the project.

Since the letter, Minister Flake has also withdrew from his partnership with AEG. He stated,

"Unfortunately, my ongoing participation in Aqueduct Entertainment has become a distraction that has taken me and my attention away from the community projects I created and nurtured.  I support Aqueduct Entertainment's vision for the revitalization of my community through the creation of jobs, retail facilities and other opportunities for growth.”

In addition to losing Flake, Hip-Hop mogul Jay-Z, who had an estimated 2% interest in AEG through his ownership in Gain Global Investments Network, has backed out of a deal with the Aqueduct Entertainment Group to invest in the Aqueduct racino it was revealed on March 9^th.

The racino project has generated a great deal of controversy because the losing bidders claim New York Gov. David Paterson awarded AEG the contract  due to his personal relationship with the investors.

As previously reported, state and federal authorities are investigating accusations that the selection of AEG was corrupt. Red flags were raised when Paterson met with Flake just days after announcing the award to AEG seeking a political endorsement for a re-election run.

Last week, subpoenas were issued to Jay-Z and Russell Simmons in regards to the deal.

Simmons, who served as an advisor to Penn National Gaming, was one of the five losing bidders for the contract.

Critics have claimed that AEG's bid was $100 million less than the other bids, which were as high as $300 million, with other incentives layered into the deal. Many speculate that it was the aforementioned partnerships that gave AEG the edge they needed to win.

I don't know about you, but the issues surrounding this case seem to be a little under the table.   I don't feel that this is quite the end of the AEG scandal.  We know Jay-Z said he will not lose, but with this deal…it seems he has.

Peep Hip-Hop Wired's previous coverage of this ordeal:

Jay-Z & Russell Simmons Subpoenaed Over Racetrack/Casino Bids

Russell Simmons Not In Favor Of Jay-Z & AEG Casino Partnership; Starts New Comedy Venture

Jay-Z and AEG Casino Partnership Under Federal Investigation