SENATE STATE GOVERNMENT, BANKING AND FINANCIAL INSTITUTIONS COMMITTEE
SENATE CONCURRENT RESOLUTION No. 31(1R)
"Proposes Constitutional amendment to allow Legislature to authorize, by law,
specific kind, restrictions, and control of wagering on the results
of live or simulcast running and harness horse races"
|LOCATION:||Committee Room 7
State House Annex
Trenton, New Jersey
|DATE:||May 21, 1998
MEMBERS OF COMMITTEE PRESENT:
Senator Walter J. Kavanaugh, Chairman
Senator Peter A. Inverso, Vice-Chairman
Senator Norman M. Robertson
Senator Byron M. Baer
Senator Wayne R. Bryant
Joseph P. Capalbo David Brogan Thomas J. Hastie
Theodore C. Settle Senate Majority Senate Democratic
Office of Legislative Services Committee Aide Committee Aide
Candace L. Straight
New Jersey Sports and Exposition Authority, and
Racing Industry Study Commission 2
The Council on Compulsive Gambling of New Jersey, Inc. 6
Senator Robert W. Singer
District 30 9
Standardbred Breeders and Owners Association of
New Jersey 12
New Jersey Thoroughbred Horseman's
Benevolent Association 12
Ed Looney 1x
John H. Forbes
New Jersey Thoroughbred Horseman's
Ed Rosen 5x
SENATOR WALTER J. KAVANAUGH (Chairman): The meeting of the Senate State Government, Banking and Financial Institutions Committee here on May 21 of 98 to order. Could we have a roll call, please, of members.
MR. CAPALBO (Committee Aide): Okay.
SENATOR KAVANAUGH: Here.
MR. CAPALBO: Senator Robertson.
SENATOR ROBERTSON: Here.
SENATOR KAVANAUGH: All right. This can start. It's a public hearing, so a quorum is not necessary -- but if you would read a description of the legislation, please.
MR. CAPALBO: SCR-31 was previously voted out of the Committee, so this is just a public hearing to conform to constitutional requirements.
SCR-31 proposes to amend the State constitution to allow the Legislature, by law, to authorize the specific kind, restrictions, and control of wagering on the results of live or simulcast horse racing or harness racing conducted in or outside the State. At present, only pari-mutuel wagering on races is permitted, and any law to change this limitation must be placed on the ballot and approved by the voters at a general election. This proposed amendment allows the Legislature to authorize, in addition to pari-mutuel wagering, other types of betting such as account wagering, telephone wagering, and offtrack betting.
SENATOR KAVANAUGH: Thank you very much.
We have, to testify before us, the Vice Chair of the New Jersey Sports and Exposition Authority, Candace Straight, if she would come forward.
Good morning, Candace.
C A N D A C E L. S T R A I G H T: Good morning.
SENATOR KAVANAUGH: She'll be our first testifier.
MS. STRAIGHT: Good morning, ladies and gentlemen. I'm very happy to be here today, and I thank you for allowing me to testify. In my former capacity--
SENATOR KAVANAUGH: Excuse me, if you--
MS. STRAIGHT: Do you want me to--
SENATOR KAVANAUGH: If you use the mike -- and also for the recording purposes of the meeting, can you hear her all right? (affirmative response from hearing reporter)
This microphone that I'm speaking through (indicating PA microphone) is not going through her equipment -- that one is, yes.
Okay, thank you.
MS. STRAIGHT: Thank you.
In my former capacity as the Chairman of the Governor's Racing Industry Study Commission and also wearing my hat as the Vice Chairman of the New Jersey Sports and Exposition Authority, I want to thank every member on the Committee and thank the Chair, in particular, for taking up this very important question to an important industry in the State of New Jersey.
I'd also like to thank Governor Whitman for her interest and concern in the future of the billion dollar equine industry in the State of New Jersey. And in particular, I want to thank Senator Singer and Senator Codey and Assemblyman Arnone and Assemblyman Roberts who were members of our Committee and provided outstanding leadership on this Commission. Their collective efforts are very much the reason why we are here today.
Before your consideration, Senators, is a very important referendum. The question you are considering protects and promotes an industry that is an economic and environmental asset to the State of New Jersey. It does so by leveling the regulatory and legislative playing field. The result will be the most positive legislative step forward for the billion dollar New Jersey equine industry in over a decade.
The Racing Industry Study Commission conducted over the last year and a half, in my opinion, fair and open hearings. We took volumes of testimony and presented a series of recommendations that are very important for the racing industry in terms of competitive balance with other gaming in this state and with racing jurisdictions on our borders.
In looking at the current environment, the Legislature rightfully maintains control over the State Lottery and with the Casino Control Commission over gaming in Atlantic City. It is sound public policy, and I come before you today to stress the importance of correcting this constitutional anomaly so that we can now allow racing the same governmental status.
For the equine industry to pursue the recommendations of our year-long commission, it requires a regulatory and legislative climate that is flexible but also functions in the best public interest. It is, in the virtually unanimous opinion of the study commission members, decidedly in the public interest to protect the State environment and to promote the state economy by allowing racing the ability to compete fairly.
Fair competition is the ability for racing to bring new products to the market, which will keep the entire equine industry healthy. A better product also means more customers. More customers means higher handle. Higher handle equals higher purses, which supports the entire industry. It's a very important infrastructure. We go from the breeder, to the owner, to the trainers, to the individuals who provide services to the industry, and finally, to the race tracks.
When our neighboring racing states wish to improve their product, it does not take a state referendum. When the casinos and the lottery in New Jersey wish to improve their product, it requires careful oversight, but no cumbersome referendum. All racing seeks today is to be treated in the same way.
Ample testimony and witness has been brought forth regarding the special and vital nature of the New Jersey equine industry. I need not fully reiterate the enormous positive impact, on an economic and environmental basis, that racing has for the state. Clearly, there is a consensus that jobs and acres of open, green space are worth preserving and nurturing for the next generation.
The most visible of the horse racing industry to most New Jerseyans are the five racetracks, including the Meadowlands, Monmouth Park, Freehold, Garden State, and Atlantic City. But these facilities are only the peak of a billion dollar industry in the state, which includes 300 horse-breeding farms, 120,000 acres of precious open space devoted to equine operations, and tens of thousands of jobs being directly supported by racing.
You are charged with whether to allow the voters this fall to redress racing's competitive disadvantage. Please help us level the playing field. All industries in the 1990s are sensitive to State and Federal legislation and regulation. The horse racing industry is no exception. It also finds itself in a regionally fiercely competitive marketplace with neighboring states of New York, Pennsylvania, Delaware, and Maryland. In the decade of the 90s, New Jersey has fallen behind the competitive curve due to aggressive legislation and regulatory reform in those neighboring states -- Delaware, New York, Maryland, and Pennsylvania. In order to be prepared for the marketplace of the next few years, it requires us putting the interests of New Jersey first.
In conclusion, let us recognize the simple facts before us. Legalized gambling has seriously impacted racing nationwide, but nowhere greater than the northeast. Independent study shows that real revenue from racing has declined 27 percent since 1982, and the gross impact of the casinos and lottery combined are a negative 57 percent in New Jersey. Competitive advantages have been granted by their respective governing bodies and neighboring states competing for our customers in New Jersey.
The answer to the challenge before us is to start leveling the playing field to make positive action possible. A referendum to allow the Legislature to regulate racing, as it does casino gaming, is the logical step. The risk of inaction is too great. From 1893 to 1946, New Jersey did lose its racing industry. We need not revisit the loss of farms, jobs, green acres, and revenue that this loss could bring in the 1990s and in the 21st century.
Today, you, on this Committee, and we, in this room, can also act with vision to save and nurture what we have in racing, as well as to safeguard the State from the impact of changing gaming conditions around us.
Finally, what you are authorizing is the best possible solution -- letting the people of New Jersey decide. The racing industry is excited about the opportunity to bring their case to the voters this November, and we hope you agree.
We look forward to supporting your efforts, and I thank all of you very, very much today for this opportunity to speak.
SENATOR KAVANAUGH: Thank you for being here this morning, and you're free to go, because I know you have other commitments. So thank you for being here.
MS. STRAIGHT: Thank you.
SENATOR KAVANAUGH: That's why we wanted to make sure that we could accommodate you.
And next, Ed Looney from The Council on Compulsive Gambling of New Jersey -- one of our highly respected individuals. For those of you who know the 1-800-GAMBLER-- And this came from Wexler. Now, we're Looney.
E D L O O N E Y: Great. Thank you very much.
SENATOR KAVANAUGH: Good morning, Ed.
MR. LOONEY: And welcome to my constituent head over here, Norman Robertson, from Passaic County. He's quite a guy and is great and good to see him involved over here.
SENATOR ROBERTSON: Thanks.
SENATOR KAVANAUGH: Does he call often? (laughter)
MR. LOONEY: Pardon me?
SENATOR ROBERTSON: I only gamble in politics.
MR. LOONEY: Yeah.
SENATOR ROBERTSON: About 50,000 down.
MR. LOONEY: Yeah. We've had some times.
I just wanted to briefly tell you that The Council on Compulsive Gambling is a private, non-profit in which we do prevention education and referral services in New Jersey. We have not only the 1-800-GAMBLER, but we have a website that's second to none -- about 100 pages of good information. We get about 7000 hits a month off it. I mean, it's going all over the world. People pick up good information.
New Jersey is really very blessed that we do have leadership with compulsive gambling issues. We are the first state to have what they call certification of gambling counselors. We're very proud of the 800 number, which is the first 24-hour help line that was in the nation. We're also very proud of our senior outreach program, which we just started.
Some of the things that are happening in our society-- We're starting to get an impasse with gambling here. We have a tremendous amount of gambling in our state -- more than a billion dollars is brought into the coffers from gambling revenue. We see a screeching halt to the lottery increases that they've had every year. This is the first year that things have just almost come down to a screeching halt, which means that there's going to be new ways to aggressively go after lottery gamblers. We see power balls raging throughout the country. This is also going to affect us. We see the casino industry, also, at almost like a negative growth starting to happen. Three more casinos will be coming into New Jersey, and we're probably going to see a fallout of a couple of casinos going downhill.
I happen to sit on the Racing Study Commission, also. I was really open to, and it was good to hear some of the passionate people that are involved with racing that are going to be affected if they don't have this level playing field. I have no problem about legislators on this particular bill to make decisions. But when we bring in two kinds of gambling, we're bringing in account gambling and we're bringing in OTB. OTB will traditionally affect a lot of senior men. We see that in New Jersey, and wherever OTB is, there's a tremendous impact.
We also have to start to look at the downside of gambling. Last year, there was a report that came out on bankruptcy, and it indicated that in New Jersey-- What they did is, they found every area of the country that had any gambling -- any county -- and they did studies on it. And if there was one gambling entity within that county, the bankruptcy rate went up 18 percent. If there were five or more in the county, it went up 35 percent. New Jersey, in Atlantic County, had 71 percent higher bankruptcy rates than the average of New Jersey. So these are issues that we have to start looking at. There's no free lunch when we bring in gambling. So we're going to increase gambling, what we need to do is to start to provide some funds. We lag behind other states. New York gives over a million dollars to gambling treatment. We have $100,000. We're grateful for that but, believe me, we need to do more to do a proper job.
And the other area was-- We've been trying desperately to get adolescent -- information into adolescents. There's no education in New Jersey right now in any of our school systems, and that's a tragedy. Mom is gambling, the church is gambling, our government is gambling, and we get surprised when kids have tremendous gambling problems in high schools. What we need to do is to start to provide funds. So if this bill is passed eventually, I'm hoping that you're going to consider compulsive gambling issues, and particularly adolescent gambling, where we can do a job. We can -- instead of mandating to schools -- we can do the job through the Council, and we can provide a lot of good information.
And we also would like to have some money for treatment. We have 10 treatment programs. Three of them closed in the last two years because of lack of funds. That's also a crime.
Thank you very much.
SENATOR KAVANAUGH: Thank you, Ed.
We next have Leon Zimmerman, Standardbred Breeders and Owners Association, for some comments.
Is Nancy Becker or Ed Rosen here? (affirmative response from audience) If you'd like to prepare next for a few brief comments -- I think you're both in favor of the thing.
I also would like to note the presence of the sponsor, Senator Singer.
Senator, do you want to have a comment before--
S E N A T O R R O B E R T W. S I N G E R: First of all, I want to thank the Committee very much for holding the hearing about this piece of legislation. I want to start, from the outset, to tell you that all of us realize the condition facing the racing industry today in the state -- the need for this legislation.
Senator Bryant has, on a continual basis, been concerned about not having wagering without the tracks being operated. His concern is about Garden State Track. I want to assure him, I've asked OLS to take a look at that, and we'll have information back in prior to the bill being posted on the board. We all are concerned about that, Senator. It is an important issue to all of us. No one wants to see the Garden State Track closed and not have live racing. I'll have a report back to you prior to the vote on the floor for that. I've taken your comments in the spirit they've been given, in a positive vein, and am doing that right now.
I want to assure the Committee and the Chairman that this is in the best interest of the industry. The industry is in dire straits. This will, again, give them a chance to compete. As you know, we haven't gone towards looking at slot machines, things along those lines. We want to just be able to do what other states do with their horse racing industry to keep it a viable, live industry in our state that employs thousands of people. It puts billions of dollars into the economy.
All of us sitting here have many horse farms within our districts that employ people, that pay taxes, that are a vibrant part of it. And to keep that industry alive -- the breeding industry -- to keep the tracks viable, we need some help. Our Study Commission came back with these recommendations. I sat on that commission and was pleased to introduce this legislation as one of the linchpins of what has to be done to help the industry out.
And, again, I want to thank the Chairman and the Committee for having this hearing today and being so supportive of this issue. Thank you.
SENATOR KAVANAUGH: Thank you, Senator.
And at this time, I would ask, for the record, if Senator Bryant would care to comment.
SENATOR BRYANT: Thank you, Mr. Chairman, and let me say to the sponsors and all those who are concerned and have worked very hard in terms of the issue that I addressed -- and that issue is basic -- simply making sure that the voters understand that at the end of the day that this would be hooked into some type of live racing so that you wouldn't have these parlors and places where live racing is not. I think that's going to be worked out, but they're right. I want to be very clear on the record. I'm not opposed to helping the industry to keep racing alive in New Jersey. It's just that the voters know that it will be alive, and we should have the power then, as legislators, to figure out what we need to do in order to make sure that that is as viable and competitive with our surrounding states and what's happening throughout the country, so that they can have the purses necessary to bring the kind of racing that will make racing viable and keep it a viable industry.
I appreciate that. Thank you.
SENATOR KAVANAUGH: Thank you, Senator.
And also, for the record, note the presence of Senator Baer and the presence of the Vice-Chair, Senator Inverso.
Now, Leon, if you would like to come forward again, for your brief statement.
L E O N Z I M M E R M A N: Okay. My name is Leon Zimmerman, and I represent the Standardbred Breeders and Owners Association of New Jersey, which is composed of all the individuals who are involved in harness racing -- several thousand of which are breeders, owners, trainers, drivers, caretakers, and people in related industries.
We, of course, support this legislation, as Senator Singer indicated, which is a linchpin of what was recommended by the Governor's Racing Industry Study Commission. Rather than extensively present to you the position, I will tell you that I commend Candace Straight, Chairman of that study commission, which I was pleased to serve as a member of, as well. She summarized the reasons and the need for this legislation quite well in her presentation. So I will tell you that our part of the horse racing industry in New Jersey echoes those thoughts and urges all members of the Legislature to support passage of this bill to put it on the ballot in November, in the hopes of leveling the playing field and giving the New Jersey horse racing industry an opportunity to compete with its neighbors and be unshackled from the constitutional problem.
I thank you very much.
SENATOR KAVANAUGH: Thank you very much, Leon, for that concise report.
E D R O S E N: I'll try to be as brief.
SENATOR KAVANAUGH: --from the -- representing the Thoroughbred Horseman's--
MR. ROSEN: Benevolent Association.
SENATOR KAVANAUGH: --Benevolent Association.
MR. ROSEN: I have submitted a written statement on behalf of John Forbes, the President of the Association. I'd just like to echo some of the sentiments that have been expressed prior to me.
Clearly, all of you are aware of the plight of the industry, and this is essential in our struggle to stay alive. The one point I would like to highlight, which has also been mentioned here today is, we, as the representatives of the owners and trainers of horses throughout the state of New Jersey, are particularly concerned with the preservation of live racing. I mean, it's nice for us to all talk about the preservation of open spaces and farmland, and all, but the only reason those farms will exist is if there's live racing in New Jersey. So we share the sentiments and highlight the fact that while the introduction of innovations like offtrack wagering and account wagering will help the industry tremendously, that it has to be looked upon as an addition, a supplement, not a substitution for live racing in the state of New Jersey.
But with that one caveat in mind, we, too, hardily support this proposed amendment and encourage you to move forward to help racing in New Jersey.
Thank you, Senator.
SENATOR KAVANAUGH: Thank you.
SENATOR INVERSO: May I ask a question?
SENATOR KAVANAUGH: Certainly, Vice-Chairman Inverso.
SENATOR INVERSO: I share your thoughts on the preservation of horse racing in New Jersey. It's part of the mosaic that makes up our state, and people are surprised to learn how many horses we do have here in New Jersey -- how many horse farms we have in this densely populated state. Do you have any thoughts on -- that you can share with us going forward, on how we can help the industry--
MR. ROSEN: Well, these--
SENATOR INVERSO: --apart from this? Obviously, this will help.
MR. ROSEN: Of course, it will. As Candace Straight pointed out, the purses are what fuel the industry. If we have racetracks here in New Jersey that have a competitive purse structure -- you know, competitive to the neighboring jurisdictions and throughout the United States -- we will be able to attract horses to run at the racetracks here in New Jersey. And the better the quality of racing, the more people that will attend, and the spiral will go upward instead of downward that we have now. So the addition of the innovations that are really talked about here -- offtrack wagering and account wagering -- will certainly help the industry, but it has to be used to supplement the purse structure so that ultimately the purse structure will attract the horses here, and then the people, and then racing will thrive, again, as it once did.
SENATOR INVERSO: But that's the key. The key is that this has to supplement the purse structure.
MR. ROSEN: Correct. And what we're concerned about, though, is that it be used to do that and to preserve live racing in the tracks throughout the state. Obviously, Atlantic City has now, unfortunately, fallen by the wayside, and Garden State is in some peril. It would be better for New Jersey, as it once was, that all of these be vital and make a productive--
SENATOR INVERSO: See, I share the same thoughts that Senator Bryant has conveyed, when this bill was discussed previously and today, that whatever we do it does link with live racing so that we can foster the program going forward.
MR. ROSEN: Right, but I don't want to discourage anyone. It's clear that this particular-- The Racing Industry Study Commission, under the leadership of Candace Straight, did tremendous amount of work looking into the problems of racing and trying to solve those problems by making recommendations. This is really a first step that's important, because without this first step, you can't do any of the others. So I don't mean to discourage you from going forward with this. I just know that, at a subsequent time when legislators are faced with other questions, it should be in your mind to use this power that you will be given very carefully for the proper purposes.
SENATOR INVERSO: And you're satisfied that this amendment will lead to the enlargement of purses, which will lead to the preservation of the industry?
MR. ROSEN: Well, it will lead to the Legislature having to look into all of these questions. And it's hoped that the Legislature will treat them correctly at the time it comes before them.
SENATOR INVERSO: Right. Thank you.
SENATOR KAVANAUGH: Yes. This legislation will allow the Legislature to expand--
MR. ROSEN: To make those decisions.
SENATOR KAVANAUGH: Right. Thank you very much.
Does anyone else care to be heard? Otherwise, we'll call the public hearing to a close.
SENATOR ROBERTSON: Mr. Chairman.
SENATOR KAVANAUGH: Yes.
SENATOR ROBERTSON: I do want to make one quick comment on this and underscore something that Mr. Looney said. I also support the recommendations that are made here. I voted in favor of them when they first came before this Committee. And even though I happen to represent a fairly urban district, I will point out, parenthetically, every time I see the Preakness run I'm reminded that that race is named after a section of Wayne, in the 34th District. The first horse that won that stakes race was trained in Passaic County, in that area.
But as we move along, when we have the opportunity -- if we have the opportunity -- as a Legislature to consider legislation with respect to this industry, and there are further opportunities for the state to accumulate more tax dollars, I really think it is in our best interest and the best interest of the people to try to build into any subsequent legislation some fixed amount for treatment. I have been happy to use Ed's services for employees and others that I've known and clients who have needed treatment. We really can't underscore enough the value of these sorts of approaches. It's always a struggle to keep a program going. And as this opens up the door to new revenue sources for the state, I would hope that we would consider doing something aggressively on the treatment end at that time.
SENATOR KAVANAUGH: Thank you, Senator Robertson.
SENATOR BRYANT: Mr. Chairman, just before you close, and I just want to be very clear. It is my understanding that we're going to look at some language in the constitutional amendment which basically, if OLS says is appropriate that we can do that, that would actually link the constitutional amendment that we cannot even do the laws unless there's live racing connected with how we do those parlors. And I want to qualify that, as I'm moving forward. If that doesn't happen, I will oppose it in its present language. But I'm hoping that we can do that, and I just wanted to make that very clear.
SENATOR KAVANAUGH: Yes. Thank you.
SENATOR BAER: Mr. Chairman.
SENATOR KAVANAUGH: Yes. I would like to move on. We have our regular meeting, but go ahead, Senator Baer.
SENATOR BAER: I was going to ask, if, since this has indicated that this is being held in accordance with the rules -- part of the intention of that normally is so that the record will be -- not the only purpose, but so that the record -- there will be more of a record to guide interpretations in determination of legislative intent. And I was going to ask if the record would be open for a period of time, as it sometimes is? However, if it is the intent of the Chair to have modification of this language, I hear what Senator Bryant says--
SENATOR KAVANAUGH: Senator Baer, what is happening is, the record will be recorded. It will then be made available to the Legislature to review and the comments. That's why I wanted to make sure that Senator Bryant had his comments in the record. And than you, as an elected official, who have the opportunity to introduce legislation and vote upon legislation, can use your wisdom to develop any particular type of legislation you want that would include the concerns of Senator Bryant and others.
SENATOR BAER: So, as I understand, through you, your comments about amendments had to do with the subsequent enabling legislation, not changing the language of this proposed constitutional amendment. Is that correct?
SENATOR BRYANT: No. It had to do with the language of this proposed constitutional amendment.
SENATOR BAER: And possible altering of that?
SENATOR BRYANT: Yes.
SENATOR BAER: Well, if there is going to be altering of the language in this constitutional amendment before it's adopted, wouldn't that, therefore, trigger another hearing on the final language--
SENATOR BRYANT: Not necessarily.
SENATOR BAER: --and, therefore, wouldn't be necessary for another hearing under the rules.
SENATOR KAVANAUGH: If the interpretation I believe -- that if this went through now-- I'm a plumber. He's a lawyer. We both have the health of the nation in mind. (laughter) It's something that I would have to defer to staff. But, I think that if you make -- if any amendments would come back, you'd have to have another public hearing -- lay over for another 20 days. Is that correct?
MR. CAPALBO: Yes.
SENATOR BAER: The reason I raised that is, if that's what's going to happen, then it isn't relevent whether the record's going to be open here for a few days, because there will be the new record. But if there isn't going to be a change, I would ask if, for just a limited number of days, parties could provide, through the Committee and the Chair, written comments which could also be part of the hearing record of this hearing.
SENATOR KAVANAUGH: I think that there can be both a minority view, a majority view added to a public hearing record that can be part of the finished product. The sponsor, as far as the concerns that have been expressed, I think that you are on the same wavelength. I'm not sure exactly.
SENATOR BRYANT: Mr. Chairman. I want to defer to OLS, too, but I'm not sure part of what we're asking them to look at is whether, in fact, you'd actually have to have another public hearing. Part of my understanding of the public hearing is to get you information so that you can amend. I think there is a requirement that it must lay over even if, in fact, you amend or not.
MR. CAPALBO: Yes, I think there was some preliminary discussion about this with some other people. The tentative opinion was that--
SENATOR BRYANT: I haven't gotten to the tentative--
MR. CAPALBO: --any -- it wasn't the formal opinion, but if this is amended, it would require replacing on the desks -- another 20-day layover and another public hearing.
SENATOR BRYANT: Okay.
SENATOR BAER: Well, at any rate, my question to you is, would you permit written testimony to be added to this hearing if you come to the conclusion that there is not going to be another hearing?
SENATOR KAVANAUGH: I believe that-- Yes, you can keep it open.
SENATOR BAER: Yes.
SENATOR KAVANAUGH: I think that's within the rules that we have of the House. So then feel free, but do it in a timely fashion, please.
SENATOR BAER: Thank you.
SENATOR KAVANAUGH: Anyone else? (no response)
If not, we'll call the public hearing to a close. I want to thank those that were here.