N.Y. Governor Faces Casino Contract Scrutiny

New York Gov. David Paterson may have swatted away rumors of sex and drug use, but he is still dogged by another big controversy: gambling. New York state has decided to give a casino contract to a politically connected firm, and some are asking if Paterson did it to bolster his re-election.

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ROBERT SMITH: Governor David Paterson may have deflected the more salacious rumors of sex and drug use, but he's still dogged by another big controversy: gambling.

I'm Robert Smith in New York.

It's not that the governor is a dice hound or a slot jockey. The governor's gambling problem is about a state contract that went to a politically connected company.

Here's the deal: New York is expected to have a deficit of about $8 billion next fiscal year, and like most desperately poor states, New York thought, hey, a few slot machines here and there and we can make some serious money.

So New York revived a long-debated plan to bring video lottery terminals, basically slot machines, to a race track in New York City. It's called Aqueduct.

Ms.�SUSAN LERNER (Executive Director, Common Cause New York): And the state has simply been dithering about who it would choose to give the contract to.

SMITH: Susan Lerner is director of the watchdog group Common Cause New York. She says the process took years and years, and the rules kept changing. But when the state finally asked for bids to run it, a lot of famous casinos applied: Harrah's, MGM Mirage, Hard Rock Entertainment. There was big money at stake.

By the highest estimates, a New York City casino would bring in a million dollars a day. But in a secret process, the governor and the leaders of the legislature did not pick MGM or Harrah's. They picked a group called AEG, which runs some of Elko, Nevada's finer establishments.

Governor David Paterson, appearing on the Don Imus show this morning, admitted that AEG was ranked number two in the process, but...

Governor DAVID PATERSON (Democrat, New York): They were strongly competitive. They had a good relationship with the community. They had a strong minority in women's business quotient to their plan.

SMITH: AEG offered $300 million to the state up front, and last but not least, the winning company had, as one of its investors, a former congressman and New York political big shot, the Reverend Floyd Flake.

Now, this is where it gets sticky. Governor David Paterson is running what's looking like a tough race for re-election. He would dearly love to have the endorsement of the Reverend Floyd Flake. So a few days after Paterson announced the casino deal, he had a private meeting with Flake, the casino investor, where they discussed, quote, "a variety of issues."

This morning, Paterson said the private meeting was not an attempt to get Flake's support.

Gov. PATERSON: And there's nothing unethical with meeting with people after the bid has in other words, after the final decision has been made. As a matter of fact, you have to meet with their company to see if they can comply with the terms of the contract.

SMITH: But because the process was secret, the governor is having a hard time explaining why a politically connected company was picked over competitors with more money and better reputations.

Susan Lerner from Common Cause.

Ms.�LERNER: Even if there was no quid pro quo, it just has such an appearance of impropriety. It just reeks of politics and not governance.

SMITH: But unlike those personal rumors, this is a charge the governor can at least fight back on, and he'll have plenty of time. The casino deal for New York City has a long way to go before it's finalized.

Robert Smith, NPR News, New York.

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