Purse Subsidy For New Jersey Racetracks Advancing In Trenton

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A $100 million bill that figures to be crucial in the viability of the New Jersey horse racing industry, as well as its offshoots, is expected to be up for a vote of the full Senate next week.

Should the bill be approved in the Assembly as well, it would go to Governor Phil Murphy’s desk, and all indications are that he would sign the bill into law. Horsemen may have to be patient for up to a couple of more weeks, though, as the Assembly hasn’t moved on the bill yet.

A key test on Monday not only was approval from two Senate committees, but a lack of legislative pushback on spending $20 million a year for five years at a time when NJ is facing a fiscal crisis due to severe underfunding of the state’s pension system.

“We feel really good about the bill at this point,” state Senator Paul Sarlo — a sponsor of the bill who represents the Meadowlands district — told NJ Online Gambling.

Sarlo referenced a study by the Rutgers Equine Science Center showing that the industry generates $1.1 billion in annual economic impact while employing 13,000 people. “People really should read this bill as an investment in horse farms,” Sarlo said.

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Where the subsidy money goes

Monmouth Park would receive $10 million annually for purse subsidies, while the standardbred side of the equation is more complicated.

The Meadowlands Racetrack would get $6 million for overnight purses, while Freehold Raceway would get $1.6 million. Another $1.2 million would go to New Jersey Sire Stakes purses, with $600,000 each for purse subsidies for New Jersey-sired horses and for breeders awards purses.

It is those latter revenues that would encourage the survival or even expansion of the state’s horse farms, resulting in more open space in the nation’s most densely populated state.

Fund recipients would have to file an annual report measuring the level of impact of the funds on the total amount bet, the number of horses per race, the number of broodmares in New Jersey, the number of New Jersey-bred foals born, and any impact on the New Jersey Sire Stakes program. Those figures could be critical when the bill is due to expire in five years.

Sarlo clearly was encouraged to push the bill forward by a recent agreement reached by harness racing officials and Meadowlands Racetrack operator Jeff Gural after what Sarlo had described as an earlier “hiccup in negotiations.”

The two sides had squabbled over how and whether the infusion of sports betting revenues to the track would boost purses. The deal guarantees a minimum of $1 million annually for purses.

Freehold fretting

The one concern raised at Monday’s state Senate hearing came from Freehold Raceway executive Chris McErlean. While supportive of the overall proposal, McErlean said that a requirement of a written agreement on sports betting revenues between horsemen and each racetrack is “a solution in search of a problem.”

“These [amendments]were put in because of discussions and issues with one racetrack in the state,” McErlean added, referring to the Meadowlands. “We don’t think the other racetracks should be subject to the same agreements or the same standards.”

Freehold is still working on finalizing a partnership to offer sports betting at the track and online, as the other two tracks already have since this summer.

“We’re talking with a number of different vendors, and honestly when this amendment came out, it threw a lot of cold water on us being able to do a deal because of the potential implications,” McErlean testified.

Sarlo replied that he wanted clarity at all three sites to avoid a situation where horsemen might wind up going to the state Legislature seeking to remedy a dispute.

“It’s important that there is some type of agreement, even if there is no financial transaction,” Sarlo said. “It’s what each owner-operator can live with.”

A.J. Sabath, a lobbyist for the Standardbred Breeders and Owners Association of New Jersey, told the committee that his group “has a very good relationship with Freehold” and that discussions already are underway.

Peeking into the neighbor’s yard

This subsidy is a drop in the bucket compared to what horsemen in neighboring states like New York and Pennsylvania get from a slice of slot machine revenues at their tracks. But the New Jersey tracks have learned how to live lean in the past decade, so they would be prepared to get the most bang for their buck from the new funds.

So come Monday, it sounds like the state’s horsemen could be at least one key vote closer to a major boost for the industry — for five years, anyway. And while the slight delay in the Assembly no doubt is proving frustrating, this process languished for many months before getting this far.

The bottom line: The horsemen should have good reason to be optimistic.

Photo by Shackleford Photography / Shutterstock.com

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John Brennan

John Brennan has covered NJ and NY sports business and gaming since 2002 and was a Pulitzer Prize Finalist in 2008, while reporting for The Bergen County Record.

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