Influential Queens minister Floyd Flake pulled out of a bid to bring thousands of video slot machines to the Aqueduct racetrack Tuesday, amid reports that the project may be falling apart all together.

While the Reverend Floyd Flake had less than one-percent stakes in Aqueduct Entertainment Group, his name lent credibility to the project.

Amidst a federal government and the state inspector general probe as to why his group was awarded the lucrative contract, Flake said he removed his ties to the group.

"I have a continuing obligation to my community and the various projects I created and developed including but not limited to the church, its related school, the retail facilities we established in the community, the Senior Citizens Housing Project, the home care operation and many others,” Flake said in a statement released today. “Unfortunately, my ongoing participation in Aqueduct Entertainment has become a distraction that has taken me and my attention away from the community projects I created and nurtured."

Investigators are probing whether the governor traded support for AEG in exchange for Flake's political help, a charge the pastor dismissed last week on NY1’s political program “Inside City Hall.”

"All teams had political players on them, and no matter how their process came out, I think the same issues would have evolved, no matter who did not get that bid,” Flake said.

An unconfirmed report said another high-profile investor, hip-hop impresario Jay-Z, is also backing out. His representative would not comment Tuesday.

Meanwhile, another report said the Paterson administration is threatening to pull the plug on the group altogether because the investors missed a deadline to submit to background checks.

The project is seen as key to development in southeast Queens, but it also matters city and statewide, as lawmakers are banking on the project pumping in hundreds of millions of dollars to the state budget.

A representative of the group says it submitted all the paperwork on time, and wants to break ground as soon as possible.

However, on Tuesday the governor said he had recused himself on the advice of his lawyer and sounded hesitant about AEG's chance for success.

"This was a decision made by all three leaders, and this was a decision that we were taking a long time to make," said Paterson. "And so, this was a decision I certainly thought was right at the time."

Local lawmakers said the governor's decision process was deeply flawed.

"It's disappointing in the sense that this project now gets delayed once again, so the thousand or so construction jobs and the thousand or so post-construction jobs we have to wait for," said Queens Senator Joseph Addabbo. "And certainly the monetary benefit to the state is delayed at a time that we most surely needed it."

The agreement had included a $300 million upfront payment to the cash-troubled state on March 31, the day before the state budget is due.