MILLSTONE — State Sen. Jennifer Beck (R-12) paid a visit to discuss the latest developments regarding gaming and horse racing in New Jersey.
Beck attended the Feb. 3 Township Committee meeting. She said that this is the last year of an agreement that the casinos made with the horse-racing industry to pay a $90 million purse supplement to racetracks that do not pursue the installation of slot machines.
Mayor Nancy Grbelja noted that the casinos were granted lifetime tax exemption for comps given to patrons as part of the supplement agreement.
Beck said that Gov. Chris Christie issued executive order 11 earlier that day. The order states that New Jersey’s gaming, professional sports and entertainment industries are confronting unprecedented financial and structural challenges that require immediate action to restore financial accountability for taxpayer benefit. To that end, Christie created a New Jersey Gaming, Sports, and Entertainment Advisory Commission.
Christie has charged the commission with giving him recommendations for a comprehensive, statewide approach to resolving the issues and financial needs of the state’s gaming, professional sports and entertainment industries. The commission will focus on addressing the ongoing financial viability of the New Jersey Sports and Exposition Authority (NJSEA), advancing or resolving the stalled Xanadu project, improving the competitiveness of the gaming industry in Atlantic City, promoting Atlantic City as a destination resort, and ensuring that horse racing becomes self-sustaining.
The commission will issue its final report no later than June 30, at which time the commission will expire.
Jon Hanson, former chairman of the NJSEA, will head the commission. Beck said that the rest of the members are people that do not have connections to either the racing or casino industries, so they can provide “unbiased” viewpoints.
Other commission members are Robert E. Mulcahy III, a former president of the NJSEA and athletic director at Rutgers University; Finn Wentworth, principal of Normandy Partners and founder of the YES Network; Al Leiter, former Major League Baseball pitcher and YES Network commentator; Wes Lang, managing director of WML Partners, a New Jerseybased private equity investment and development company; Debra P. DiLorenzo, president and CEO of the Chamber of Commerce of southern New Jersey; and Robert Holmes, a law professor at Rutgers School of Law in Newark, where he serves as deputy director of clinical programs and director of the community law clinic.
According to a report on New Jersey gaming issued by a 2009 commission on which Beck served, the state will face an estimated $8 billion budget deficit in fiscal year 2011. Since 2006, Atlantic City casinos have lost 31 percent of their gaming revenue to states in the region, including Pennsylvania, Delaware and New York, that have slot machines or video lottery terminals (VLTs) at their racetracks.
In 2006, the Meadowlands in East Rutherford made $11.3 million. Last year,
it lost $10 million.
A 2007 report by Christiansen Capital Advisors, commissioned by the New Jersey Department of the Treasury, stated that 2,100 VLTs at the Meadowlands would serve a latent demand for gaming in North Jersey, initially generating over $300 million annually of new or recaptured revenue. A study issued by the same company in 2005 stated that 5,000 VLTs at the Meadowlands would produce $750 million annually, and 10,000 machines would produce $1.5 billion annually. The same study suggested that 2,100 VLTs at the Meadowlands would reduce Atlantic City gross gaming revenue by 0.1 percent.
A Rutgers Equine Science Center study in July 2009 reported that 42,000 equines are housed at 7,200 facilities throughout the state. Nearly one-third of those horses are in racing-related activities.
T
he study valued the state’s equine industry
at $4 billion and said it generates $1.1 billion annually for the New Jersey economy. The equine industry is responsible for 13,000 jobs, and pays an estimated $160 million annually in federal, state and local taxes. New Jersey’s four racing venues — the Meadowlands, Monmouth Park in Oceanport, Freehold Raceway in Freehold and Atlantic City Race Course in Mays Landing — contribute $502 million to the state’s economy annually, according to the study.
The study also found that there are 176,000 acres supporting equine facilities, with equine-related agriculture representing more than 20 percent of the state’s total 790,000 agricultural acres.
Beck noted that there are 32 gaming venues in the five-state region surrounding New Jersey. She said 12 are located on New Jersey’s borders, including Philadelphia Park in Bensalem, Pa., Harrah’s Chester Downs in Chester, Pa., and Sands Casino Resort Bethlehem in Bethlehem, Pa.
In September, Pennsylvania approved the use of table games at racinos and casinos as part of the state budget. The table games are expected to be up and running by the middle of this year, according to Beck. In April 2009, Pennsylvania Gov. Ed Rendell projected that VLTs would generate $1 billion in revenue for his state by the end of this year.
In New York, eight racinos that have opened since 2004 have generated $1 billion in new revenue for the state. Yonkers Raceway, located 15 minutes from the New Jersey border, is the highest-grossing racino in the country, according to the report.
When Pennsylvania opened gaming facilities at racetracks, Atlantic City revenue decreased by 5.7 percent in 2007 and 7.6 percent in 2008. The report also states that wagering continues to grow even if attendance at racetracks has decreased.
Beck noted that Harrah’s operates the racino in Chester, Pa., and that MGM is involved with the Aqueduct Entertainment Group on a bid to build a mega-casino at the Aqueduct Racetrack in Queens, N.Y. With the advent of commercial gaming, Pennsylvania has opened two new racetracks, she said.
Beck said that New Jersey’s horsemen would move to areas that offer higher purses and more live racing. In 1986, there were 100 standardbred stallions breeding with approximately 3,600 mares in New Jersey. Today, there are 11 stallions breeding with 1,300 mares. There were 165 thoroughbred stallions and 1,052 registered foals in the state in 1986. Today there are 29 thoroughbred stallions and 250 registered foals.
Grbelja, who owns standardbred racehorses, said that she races her horses at Chester Downs where there are better purses. She announced that she is organizing members of the horse-racing community in a grassroots lobbying effort to save New Jersey’s racing industry.
“If we have to bring horses and race around the statehouse, we will do it,” she said.
Grbelja alleged that the businessmen serving on Christie’s commission would only look at dollars and cents, while the state’s horsemen are looking at a way of life and its affect on agriculturally related businesses.
“It will be a hell of a fight before we allow the state to turn its back on horse racing and the horse industry,” she said.
Beck said the mayor could count on her to be part of the fight.