Paterson Recuses Himself From Rasino Development Project

A controversial plan to develop a casino at the Aqueduct Racetrack has hit some new hurdles. Two high-profile investors, rapper Jay-Z and Reverend Floyd Flake, have exited the partnership. And Gov. David Paterson has withdrawn from negotiations with the developer, Aqueduct Entertainment Group. Paterson initially supported AEG over several rivals for the project.

"This was a decision I certainly thought was right at the time," the governor says. "Whether or not they are able to comply with the protocols is the same problem one of the other companies was unable to do last year."

Delaware North backed out of an earlier deal to bring gaming to Aqueduct.

The departures of Jay-Z and Flake come as federal prosecutors and the state's Inspector General investigate the Aqueduct deal. In January, Paterson and legislative leaders chose AEG over several rival companies.

Paterson says his lawyers have advised him to no longer comment on the deal. AEG's CEO says the partnership will make good on its agreement to pay a $300 million licensing fee due the state by March 31.