The selection of a politically connected firm to operate video lottery terminals at a Queens racetrack drew fire last week, calling the transaction into question.

Assembly Speaker Sheldon Silver, D-Manhattan, said in a letter last week that the winning bidder, Aqueduct Entertainment Group, must meet a number of conditions before he will sign a memorandum of understanding. Among the conditions was an increase in the amount of an up-front payment to the state from $200 million to $300 million. Silver said the conditions are non-negotiable.

The state plans to sell bonds to finance developments at the Aqueduct Racetrack and would in turn receive the up-front payment from the operator. The state is counting on the payment to help close its current-year budget deficit. It has capped bond issuance for video lottery terminal development and land acquisition by the New York Racing Association at $355 million. 

New York Gov. David Paterson announced the selection of AEG from among several bidders on Jan. 29. The approval of the MOU needed before development can begin requires the assent of Paterson, Silver and Senate Democratic Conference Leader John Sampson of Brooklyn. According to press reports, AEG has links to Sampson. Meanwhile, Paterson met last week with Rev. Floyd Flake, a politically influential pastor who has links to AEG. The governor said last week that his meeting with Flake had nothing to do with the selection of AEG.

Paterson defended the selection last week.

“AEG has both the financial viability and ability to pay the required up-front licensing fee,” he said in a statement. “All information about the bidders and their bids was presented to all involved parties as we weighed this selection.”

Senate Minority Leader Dean Skelos, R-Rockville Centre, last week called for a public hearing to examine all the bids that were submitted to the state. 

“The governor’s selection of AEG has raised more questions than answers,” Skelos said. “The Aqueduct project is too important to the city and state to allow it go forward without a public examination of the bids so everyone can be confident that the best vendor is chosen.”

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