Under a cloud of questions about ethics and influence, New York Governor David Paterson has recused himself from negotiations on a controversial plan to bring a casino to the Aqueduct Racetrack in Queens.

Paterson's move comes on the same day that Aqueduct Entertainment Group (AEG), the project's developer, had to make a critical deadline to file costly gaming license applications with the State's Lottery Commission. Paterson initially supported AEG over several rivals for the project.

"This was a decision I certainly thought was right at the time," Governor Paterson said. "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."

Federal prosecutors and state officials are investigating the bidding process. The Aqueduct Entertainment Group has recently lost two high-profile investors in the project: Reverend Floyd Flake and rapper Jay-Z. Still, AEG says it plans to make good on the $300 million dollar licensing fee due the state by March 31st.

Paterson has hired a criminal defense lawyer for assistance with other accusations against him, including charges by an ethics panel that he accepted free Yankees tickets, then lied about it.