The Future Of NJ Horse Racing May Just Hinge On Sports Betting

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Horse racing is major industry that contributes billions of dollars each year to the national economy, but in recent years the industry has struggled against a tide of decline.

Fortunately, there is ample hope for recovery, but in New Jersey a great deal of the potential relies upon the outcome of the upcoming Supreme Court decision on the constitutionality of the Professional and Amateur Sports Protection Act.

Too slow out of the gate

In the last decade, the horse racing industry has fought against decreased revenues due to the economic downturn. While other markets have taken steps to bolster racing, New Jersey has taken a turn in the other direction.

In the 29-page report “Report of the Governor’s Advisory Commission On New Jersey Gaming, Sports and Entertainment” Governor Christie’s commission recommended the privatization of previously-state-run racing operations and the end of state-enhanced racing purses. Previously, these enhancements were provided from casino revenues.

As a result the total purses paid declined from $48 million in 2010 to $23 million in 2013, with total wagers falling from $481 million to $266 million.

The Meadowlands Racetrack joined Freehold Raceway in being privately owned and controlled, and the Atlantic City Race Course shut down in 2015 at the culmination of Christie’s failed five-year plan to stem the boardwalk city’s losses (attempting to rebrand it is a family tourist spot).

Monmouth Park remains the only state-owned racetrack in the Mid-Atlantic region to not benefit from casino subsidies or an alternative gaming option.

Getting by with a little help

For years experts have been calling for increased support of New Jersey racing.

  • In 2007 the Equine Science Center found that the state horse industry was worth $4 billion, generating over $1 billion in annual economic impact and $160 million in taxes, as well as providing for 13,000 jobs.
  • A 2014 white paper argued for increasing purse size and number of race days, concluding that New Jersey had failed to remain competitive with the neighboring states in the regard.

The changes in New Jersey caused additional strife to the industry at a time when New York and Pennsylvania were giving increased support to the racing industry, shifting market strength just beyond state borders.

Pennsylvania only legalized casino gambling in 2006 with the largest licenses going to “racinos” built at existing racetracks. Significant taxes on casino earnings are used to subsidies the horse-racing market, including a 54% tax on slot revenues, 11% of which is directed to horse racing. This adds up to hundreds of millions of dollars each year, which will likely only increase further with Pennsylvania’s gambling expansion.

New York state has also increased its number of casinos and the number of betting options at its existing racinos since 2010. Without a changem New Jersey’s disadvantage will likely only continue to grow worse.

The impact of sports betting

Without a legislative option ready to restore state subsidies to the racing industry, and with plans to expand casino gambling outside of Atlantic city currently stalled, New Jersey’s racetracks can at best hope for experimental gimmicks or ideas that never make it past committee. However, this would all change should SCOTUS rule in favor of overturning PASPA in their coming decision.

Current Governor Phil Murphy has indicated New Jersey is ready to immediately move forward with sports betting. If PASPA is completely struck down then the state will enjoy a brief head start, but this advantage could be even bigger if the Supreme Court opts for the possible “third outcome” in which the act is only partially invalidated.

In the case of such a narrow ruling New Jersey alone will gain sports betting according to the law already signed by Christie, which will allow existing racetracks and casinos to begin taking wagers on sporting events. This is the new paradigm that the state’s suffering racetracks have been desperately in need of since 2010.

Monmouth Park in particular stands to benefit immediately, having already devoted infrastructure in preparation for a positive decision. The racetrack has already built a new lounge for sports betting which can be ready for full operation within two weeks of a Supreme Court announcement. Monmouth management projects they could potentially earn up to $1 billion annual on sports betting.

The Meadowlands is also poised to move next, hoping to make better use of recent renovations made during the industry decline, though it may be the third location ready after the Borgata. All of New Jersey’s casinos and racetracks are likely to offer sports betting onsite and possibly through mobile apps by the end of the year.

If, however, the courts uphold PASPA then New Jersey has little else in place to protect horse racing. In that case the state would need instead to return to subsidizing the purses and/or implement some other betting options at its racetracks if it wants to avoid the industry collapsing further.

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Ryan is a seasoned writer with several years of expertise in poker and online gaming. He is also an aficionado of advantage gambling and a general lover of statistics with a keen interest in strategic probability.

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