Jay-Z Out Of Aqueduct Racino Deal

Jay-Z has backed out of a deal with the Aqueduct Entertainment Group to invest in the Aqueduct racino it was revealed yesterday (March 9).

According to Crain’s, Jay-Z had an estimated 2% interest in AEG through an entity he has ownership in named Gain Global Investments Network.

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

In addition to Jay-Z, investor Rev. Floyd Flake also backed out of the deal yesterday due to the mounting controversy and the federal investigation into the deal, which started last week. "

"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," said Rev. Flake in a press statement.

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

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

Simmons voiced his displeasure with Gov. Paterson’s decision award AEG the contract, which will allow the company to upgrade the existing Aqueduct Race Track venue with 4,500 video slot machines.

Critics claim 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.

“I’m not knocking Rev Flake or anyone else associated with any other project. But their’s just wasn’t the best deal for New York,” Simmons wrote in February on his GlobalGrind.com website. “Speaker Silver, Senator Abrams and Governor Patterson, can any of my dear friends in NY government tell me where and when did it all go wrong? At time of great financial stress for the State, when programs for the poor are being cut, I backed what I thought was the best deal for the region, the city and the community. Why didn’t the leadership just take the best deal for the people of New York State? I did.”