AceShowbiz - New York Governor David Paterson has denied rumors his friendship with Jay-Z influenced him to approve a new race track and casino venture. Bosses at event promotion company Aqueduct Entertainment Group (AEG) landed a lucrative multi-million dollar contract from New York state officials in January to upgrade the existing Aqueduct Race Track venue and turn it into a top race track and gaming site - known as a racino - the only legal gambling place in the city.

But the ethics surrounding Paterson's choice of contractor has been called into question after it was revealed Jay-Z holds a seven per cent stake in AEG via his firm Gain Global Investments Network LLC. The rap superstar established a friendship with Paterson after they teamed up to stage his star-studded 9/11 benefit concert at the Big Apple's Madison Square Garden in September 2009.

Jay-Z signed a deal with AEG executives later that month - but the agreement has prompted a federal investigation into whether Paterson showed unfair favor to AEG's contract bid as a result of the star's involvement in the company. AEG spokesman Jonathan Rosen has dismissed the accusations, insisting the hip-hop mogul's widespread appeal prompted them to court the star.

Rosen tells the New York Post, "Given (Jay-Z's) superstardom and his long and deep connection to New York, the partners thought he could bring a unique perspective to shaping a facility that would truly be an entertainment destination. The partners were looking to bring in someone who could bring marketing and community advice to the team."

A spokeswoman for Paterson has also denied the rap connection played a role in the Governor's decision. She says, "There is absolutely no relationship between Governor Paterson's friendship with Jay-Z and the choice of AEG."