Alternative to slot machines in New Jersey

MANALAPAN, NJ — June 17, 2017 —  On Thursday June 1, 2017 the Assembly Tourism, Gaming and the Arts Committee in New Jersey heard an informal presentation to discuss the merits of historic racing.

Historic Racing is currently offered in Kentucky, Arkansas, Wyoming and Oregon where it has enjoyed success. Many look at Historic Racing as an opportunity to help the New Jersey racing and breeding program to compete with the neighboring jurisdictions and their racino driven programs.

For more information on historic racing and the informal presentation held on June 1, 2017;

t sounds like the ultimate sure thing — or the ultimate sucker's bet: Wagering money on horse races that have already happened.

It's called historical racing. The date and place of the pre-recorded races and the names of horses and jockeys remain secret until after the money is plunked down and the videotape starts.

New Jersey, whose horse racing industry is struggling, is considering legalizing such betting. The wagers would offer horse tracks, which don't have slot machines or other casino games, a new product and a potential lifeline.

The gambling industry has had an uneven experience with historical racing in several states, but its representatives testified Thursday that $1.1 billion was wagered last year in the U.S. on old horse races. In New Jersey, that could mean a tripling of state and local tax revenue, to $300 million a year, they said.

 

"Racing has fallen on hard times," said Dennis Drazin, an adviser to the New Jersey Thoroughbred Horsemen's Association. "We need help. Because of the casino gaming on our borders and the lack of any slot machines, the New Jersey purses are significantly lower than the states around us. The horses follow the money."

The product is currently offered in Kentucky, Arkansas, Wyoming and Oregon. A New Jersey state Assembly committee held a hearing Thursday on the idea.

"The state needs revenue, the horse racing industry needs revenue," said Assemblyman Ralph Caputo, a northern New Jersey Democrat. "We're very interested in any concept that will help."

But Vince Mazzeo, an Atlantic City-area Democrat and defender of that city's beleaguered casinos, voiced concern "that you're extending gaming into the tracks," something New Jersey currently prohibits.

Industry representatives say historical racing should not run afoul of New Jersey's casino regulations, because it is a game of skill, not chance. Players may not know which horses are in the race, but they are given some data before placing bets, such as the horses' odds and some stats on past performances.

Ken Jordan of Howell, N.J., a self-described "avid horse racing fan," supports the idea as a way to help the tracks survive in an atmosphere in which they get little help from the state. In 2011, Republican Gov. Chris Christie ended a $30 million annual subsidy that Atlantic City casinos paid the horse tracks to compensate for a prohibition on slot machines there.

"Anything that brings additional revenue to the tracks and helps them compete, I'm all for," Jordan said.

Drazin said there is a database of 25,000 past races from around the country that can be shown at tracks. He said the machines, which appear similar to slot machines, can allow track patrons to bet on a race every five to six minutes. Some play videotapes, others use digital representations of the race.

"We generally have 25 minutes or so between races," Drazin said. "Fans are looking for something to do."

A representative of the state's Council on Compulsive Gambling did not immediately return a message seeking comment.

Historical racing helped save the Oaklawn racetrack in Arkansas. Louis Cella, whose family has owned the track for decades, said the product originated at Oaklawn in 1999.

"Oaklawn was going in the wrong direction," he said. "We had to do something or we were going to die."

Within years, the track had 500 instant racing terminals that helped bring in $400 million in 2005-2006. The extra revenue helped boost the track's earnings and the prizes they were able to offer to racers. Cella urged New Jersey to adopt the new product.

Ironically, his track has removed most of its instant racing terminals in favor of skill-based slot machines, which are more profitable. But for tracks where casino gambling is not an option, the technology can be a lifeline, he said.

Monmouth Park in Oceanport, N.J., has invested heavily in sports betting, anticipating that it will eventually be legalized in its state. But Drazin said the track could host 1,000 instant racing terminals as an alternative. Officials from Freehold Raceway also testified in support of the proposal.

Kentucky amended its laws to permit instant racing, but Idaho and Texas pulled the plug after trials.

HOW IT WORKS

A bettor at a race track is given odds and stats on past performances for each historic race horse.

The bettor places his or her bets.

Video (or a digital representation) from a database of thousands of pre-recorded races appears on an instant racing terminal similar to a slot machine.

A patron can bet on an historic race every five to six minutes while waiting for the track's next live race to begin.

Reprinted with permission of The Morning Call

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Assembly Tourism, Gaming and the Arts Committee

Testimony in support of Historic Racing Efforts and the Harness Racing Industry

June 1, 2017

Chairman Caputo and esteemed members of the Assembly Tourism, Gaming and the Arts Committee, my name is Mark Ford. I am the President of the Standardbred Breeders and Owners Association of New Jersey.

I have been a trainer of standardbred horses for more than 20 years and during that time, horses that I trained have won over 3700 races, $65 million in purses and I was the Meadowlands trainer of the year twice. Additionally, I am the fifth leading trainer of all time. With me today is Mike Gulotta, who is SBOA’s Treasurer, and a Trustee of the New Jersey Sire Stakes.

We support this committee’s efforts on historic racing and its support of harness racing.

Our industry is facing extremely difficult challenges.

Challenging times require innovative solutions and we believe that your Historic Race Wagering efforts is one excellent example of an innovative solution.

I’d like to now have Mike explain the many benefits of your proposed legislation.

By way of introduction, I am the CEO of Deo Volente Farms, a Standardbred breeding facility built in 2008 in Flemington, New Jersey. My professional experience includes having served as an actuary for such companies as AT&T, Lucent Technologies, and many other well known companies. During the Clinton Administration, I was appointed Chairman of the Advisory Council on Pensions and Welfare Benefits. I also had the opportunity to work on the New Jersey Pension Plans before they became so woefully underfunded.

Your efforts on historic racing would have very positive and profound effects on New Jersey tax revenues – without raising taxes on our businesses and residents. Indeed, it would resurrect the racing and breeding industry in this state. In fact, I dare say it would bring New Jersey back to its previous position of preeminence in the Standardbred industry.

Based on our estimates, which themselves are derived from the experience in other states, as well as research completed by the Rutgers University Equine Science Center, implementation of this effort would result in:

1) Retaining an estimated $110M annually in state and local taxes generated by the NJ Horse Racing Industry and creating an opportunity to grow that number to $300M,

2) Preserving an estimated 13,000 jobs associated with New Jersey’s $2 Billion Equine Industry and creating 6,000 additional jobs,

3) Protecting Equine Related Open Space, which accounts for nearly 25% of the state’s 790,000 farmland acres and provides tax-paying agriculturally productive farmland and thousands of jobs in veterinary services, hay and straw supply, retail, real estate, and financial services,

4) Providing a brand new source of tax revenue for the General Fund (i.e. Handle Tax of 1.5%), and

5) Reinvigorating the NJ Breeding Programs by directing a portion of commissions earned on this new technology to the purse accounts of our Sire Stakes and NJ Bred Only races.

Additionally, this effort provides a specific allocation of 1.2% of the Gross Handle to be earmarked to our sadly underfunded pension plans. Over the next 20 years, this will add $2 Billion to our pension funds.

These numbers are real. Just look to Kentucky where Historic Race Wagering is running at $90 Million a month as of March of this year, or over a Billion dollars per year on an annualized basis. These numbers are up by almost 40% in just one year.

Without historic racing, or something to help New Jersey horsemen compete with our neighboring states, our industry will certainly fail. To illustrate the competitive disadvantage faced by New Jersey breeding and racing operations, sire stakes purses for state bred horses in New York and Pennsylvania amount to $18 Million and $15 Million respectively each year.

In New Jersey, the comparable dollar figure is $1.8 Million. So if NJ bred horses race for just 10% of what NY and PA bred horses race for, then the logical question is why breed in NJ? With historic racing, we estimate that we would add at least $10 million to our state bred racing programs for each breed.

Twenty years ago, there were 30 standardbred stallions in NJ. Today, there are just 2 commercial stallions, representing a drop of 93%.

Twenty years ago, we bred 1,853 standardbred mares in New Jersey. In 2017, we will breed an estimated 200, a drop of almost 90%. This business, both mares and stallions, went to NY, went to PA, went to Ohio.

With historic racing we become leaders again. Look at Ohio where they experienced a 250% uptick in the number of mares bred after introducing alternative gaming at their racetracks.

Your legislation will make our industry in NJ competitive, perhaps even dominant. It will increase tax revenues without increasing taxes, it will increase investment in New Jersey, it will add jobs, it will preserve and actually increase the value of our real estate, and it will begin to shore up our pension promises.

For all these reasons, we wholeheartedly support your leadership on historic racing and harness racing and we endorse a vigorous effort for its passage.