How do you fix horse racing industry in New Jersey?
Wednesday, 02 June 2010 15:35
Other states have turned to more gambling options at racetracks to bolster ailing sport
BY EVAN WEINER
The 142nd running of the Belmont Stakes takes place on Saturday and for most people who have a casual interest in thoroughbred racing, that marks the end of the Triple Crown and racing season. There is no superstar horse to follow and the Kentucky Derby and Preakness winners are sitting this race out. The hardcore racing fan and bettor will follow the horses the rest of the year but that group is thinning out year after year and that is a major problem for a once popular industry. So how do you go about and fix what used to be one of the three most followed sports in the United States?
There seems to be just one answer.
Continue building casinos and putting slots or video lottery terminals (VLT) in racetracks. Pennsylvania has done just that, New York has put VLTs in all of the state's harness tracks and one thoroughbred track, Finger Lakes. Delaware has done the same thing. West Virginia is a racing hotbed, thanks to one-armed bandits. New York by August 15 will decide on which company should put a casino at the Big A, Aqueduct, in Queens.
That seems to put New Jersey in a box. New Jersey has slots and tables in Atlantic City but there are no VLTs, which has become the salvation of racetracks in West Virginia, New York, Pennsylvania and Delaware, at racetracks throughout the state. New Jersey politicians may be joining the VLT fray. State backed gambling is not going away and in fact, the state-sanction gaming industry is growing rapidly. The racetrack casinos are popular with people who live within a 20-25 mile radius of the track and a lot of people are making money off of local bettors who all of a sudden have VLTs in their backyard.
Horse racing needs casino revenues to exist but in many areas there would be no casinos without the horses.
Gambling has become a major component in municipal budgeting. Ironically it was the government rush to embrace Off Track Betting (and revenues) that helped to create an atmosphere in New York that has nearly killed the horse racing business.
"The racing business, you go back to the early 1970s, tracks were jammed with people because there was no other kinds of gambling and you couldn't go to an OTB. Once the OTB started in 1971, they built a hundred OTBs in a matter of three or four years and the attendance at the track plummeted," said Charles Hayward, the President and the Chief Operating Officer of the New York Racing Association (NYRA). "You are just never going to get that kind of dynamic back, unfortunately, and the attention and the knowledge and the fan base just eroded."
The erosion has deeply cut into the industry. Hayward's group just got a $15 million pledge from New York State so it could keep operating although they were entitled to $15 million. OTB, another government agency in financial distress in New York, simply has not delivered that cash to NYRA.
Hayward and NYRA may be able to open a slot area at the Big A within 12 months. The timetable seems to be August 1 for a group to get a casino license and by November 1, a contract will be signed and construction of a casino at the Queens racetrack will commence shortly thereafter. But had all the stars been in alignment in the past few years, Hayward would have opened his casino by now.
New York has not been able to grant a casino license for NYRA's tracks, the Big A, Belmont and Saratoga. Last March, the State Lottery Division would not grant a license to Governor David Patterson's preferred choice, the Aqueduct Entertainment Group. In October 2008, Delaware North was selected to be the casino licensee but the group was gone five months later because financial issues could not be resolved.
"I started here in November of 2004 and I have been asked that question and answered that question probably 40 times and all 40 times I have been wrong," said Hayward about having slots at one of his tracks. "So I have put a stop to speculating but I think there is a real significant development that appears to have changed everything.
"We selected MGM, that didn't work out (former New York Governor George) Pataki didn't support that, then the executives did two of their own processes, those didn't work out as we know. So what they (the state of New York) are doing now is what probably should have been done in the first instances. They have told the (New York) lottery to do a state RFP (request for proposal) bid process which has rules. They have started that process; they have solicited questions from all the bidders. We have been involved in helping answering that. All of the bids will be able to be judged one against the other which has not been the case in the past and I think the deadline they have set to name the bidder is early August, I think that is a little ambitious. They good news is that they are going to make a recommendation that will then be acted upon by the three political leaders (Patterson, the New York State Assembly and the New York State Senate).
"Given that there will be rankings, it will be very clearly documented, you just have a much higher sense of the level of professionalism and I think the recommendation is going to be hard for anybody to not agree with because it is going to be very transparent and very clear as to how they reach that agreement."
Of course this is New York State with a lame duck governor and a dysfunctional legislature.
"I am cautiously optimistic," said Hayward. "Although our past performances wouldn't maybe warrant that optimism."
NYRA lost money in 2009.
Delaware and Pennsylvania have a vibrant racing industry now, but it is being driven by casino dollars not the horses.
"There is no question that their (Philadelphia Park) purses have increased but they have done some things," said Hayward. "They have a hard cap percentage wise on their stakes races so that most of the money goes into their overnight racing program that takes care of the day in and day out owners and trainers. They don't have the kind of appetite to compete at the kind of stakes you will see, not only the Belmont Stakes which of course is a classic but we got five undercard races with either a grade one or grade two stakes. Day in, day out purses, the allowance, the overnight stakes, the purse levels have grown substantially they are still substantially less than Belmont and Saratoga but there is no question the racing situation has improved a lot in Pennsylvania."
With Pennsylvania and Delaware having slots and table games such as roulette and blackjack and New York already having gambling at harness tracks and apparently honing in on opening up a casino in Queens, New Jersey may be forced into some sort of retaliatory move.
The New Jersey Sports and Exposition Authority, which runs the Meadowlands and Monmouth Park racetracks, wants slot machines because the agency needs additional revenue. Monmouth Park has a shorter meet this year and is paying bigger purses but that is not going to make racing profitable in New Jersey. Atlantic City casinos subsidize the tracks to the tune of $30 million annually. The casino owners are rethinking that commitment.
"The New Jersey landscape is so hard to read," said Hayward. "Clearly, Atlantic City has a lot of stick. Monmouth is doing this program with enhanced purses, $20 of the $50 million they are giving out is coming from a casino subsidy. I think that is in return for not pursuing any gaming. They have gone from 140 dates to 50 dates this summer. The purses have gone up dramatically. They are not running any more thoroughbreds at the Meadowlands which they did before, they are going to run a weekend meet through the fall at Monmouth, which they tried in the past. So far, it looks like they have had some good success in terms of their handle and so forth. Whether they can sustain the purse level, that is a whole other question."
The Belmont is still a brand name but the thoroughbred horse racing industry is reeling. There is less interest in the ponies. It is not just in New York, it is not just in New Jersey. There is too much betting around whether it is playing a state lottery in a 7-11 or in New York, playing keno while waiting for a slice of pizza. NYRA and the New Jersey Sports and Exposition Authority are gambling that a one-armed bandit will save their industry.
Evan Weiner is an author, radio-TV commentator and lecturer and can be reached at firstname.lastname@example.org