AEG's Aqueduct Racino project is on its last leg.
The entire deal could be dead now that the Paterson administration has dropped its support for the consortium chosen to build and operate video lottery terminals at the Aqueduct racetrack in Queens.
"The Executive Branch advocates that the selection of the Aqueduct VLT (Video Lottery Terminals) franchise be done pursuant to an expedited, transparent, apolitical and publicly accountable procurement process," said the state Lottery Division in a statement released on Thursday.
The governor's office says Thursday it wants an expedited public process to choose a racino operator after the state Lottery Division concluded it can't issue a gaming license to Aqueduct Entertainment Group.
The Aqueduct racino deal had false starts from the gate, with MGM Grand and Delaware North both pulling out their plans for development since it was approved back in 2001.
Governor David Paterson ultimately chose AEG out of five other bidders, which drew criticism because their investors included rapper Jay-Z and powerful former Queens Congressman Floyd Flake. This sparked charges of favoritism by the losing bidders, especially since it happened days after Flake said he might support Attorney General Andrew Cuomo's fabled bid for governor.
Both Flake and Jay-Z backed out of the deal on Tuesday.
Details of problems with applications filed by AEG earlier this week were not immediately released. The group includes builders, bankers and a casino operator. An AEG spokeswoman didn't immediately reply to a request for comment.