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Group's bid to build casino at Aqueduct in limbo

The Aqueduct Entertainment Group's bid to build a Queens casino fell apart after the state lottery division found key members of the conglomerate could not be licensed, a Lottery official said Thursday.

Gov. David A. Paterson announced the failure of AEG's bid to build a casino at Aqueduct Race Track Thursday, two days after lottery officials informed his administration that the Rev. Floyd Flake and Jay-Z could not be licensed because the former congressman and rap star refused to submit the required background materials, which include tax returns and criminal background checks, the lottery official said.

Flake and Jay-Z dropped out of AEG Tuesday, but the lottery official said by then it was too late.

"The state has officially withdrawn its support for AEG to develop and operate a video lottery terminal facility at Aqueduct Race Track," Paterson said in a statement released by his office. "The executive branch advocates that the selection of the Aqueduct VLT franchisee be done pursuant to an expedited, transparent, apolitical and publicly accountable procurement process."

It's still not clear if Paterson, Assembly Speaker Sheldon Silver (D-Manhattan) and Senate Democratic conference leader John Sampson (D-Brooklyn), will select from among the existing bidders or start over.

Silver spokesman Dan Weiller said the speaker is "in conversations right now to determine the best way to proceed."

Sampson said, in a prepared statement, that "we now need to move forward . . . in a responsible and timely manner."

And complicating matters is the threat from AEG attorney Barry Berke that the group will seek "all available remedies" from the state. He said AEG is "ready, willing and able" to complete its memorandum of understanding with the state and pay the $300-million licensing fee.

"In the event that . . . the decision to reverse the prior selection of AEG as the successful bidder is not reconsidered, AEG intends to pursue all available remedies," Burke said.

Senators Dean Skelos (R-Rockville Centre) and Craig Johnson (D-Port Washington) called for state leaders to consider Belmont Park as a location for VLTs. Should the state reopen the Aqueduct VLT bid process, the Shinnecock tribe is not likely to pursue a bid because it still doesn't suit its wish for a full-scale casino, a tribal source said.

Sen. Eric Adams (D-Brooklyn), the chairman of the Senate's Racing, Gaming and Wagering committee, said it is more likely that Paterson, Sampson and Silver will select from the existing bidders.

"All it takes is for three men to sit in the room and come to a decision on a vendor," Adams said. "If they can't do that, then shame on us."

But the lottery official said it is virtually impossible for the state to approve another bidder before March 31, the end of the state's fiscal year.

With Mark Harrington and James T. Madore

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