ASSEMBLY TOURISM AND GAMING COMMITTEE
"Testimony to discuss the future of horse racing in New Jersey"
Committee Room 8
May 5, 2003
MEMBERS OF COMMITTEE PRESENT:
Assemblyman Gary L. Guear Sr., Chairman
Assemblyman Jeff Van Drew, Vice-Chairman
Assemblyman Jack Conners
Assemblywoman Linda Stender
Assemblyman Nicholas Asselta
Assemblyman Paul R. DíAmato
|Beth Schroeder||Jerry Traino|
|Office of Legislative Service||Assembly Majority||Assembly Republican|
|Committee Aide||Committee Aide||Committee Aide|
Meeting Recorded and
The Office of Legislative Services, Public Information Office,
Hearing Unit, State House Annex, PO 068, Trenton, New Jersey
ASSEMBLYMAN GARY L. GUEAR Sr. (Chairman): Good
afternoon, ladies and gentlemen. Welcome to the Assembly Tourism and
I want to advise everyone this afternoon that we will be
broadcasting live over the Internet. And you see the two smaller microphones
on the front desk, here-- If you would speak, when you do speak -- speak into
both mikes clearly so that our transcribers can be able to write down what
youíre saying, so they can transcribe whatís being said, and we have a manner
of record from todayís hearing.
What weíll be doing today is -- weíre meeting to discuss the future
of horse racing in New Jersey. The topics are going to include the economic
health of the Stateís horse racing industry, the status of the implementation of
off-track and account wagering, and the feasibility and impact of selling or
leasing the Stateís two racetracks: thatís Meadowlands and Monmouth Park.
The first person weíre going to hear from -- first two people weíre
going to hear from this afternoon: Art Winkler, the Senior Vice President of
Legal Affairs for the New Jersey Sports and Expo Authority; and Bruce Garland,
who is the Senior Vice President of Racing Operations.
Gentlemen, can you come forward?
Welcome to the Committee hearing.
B R U C E H. G A R L A N D: Thank you.
ASSEMBLYMAN GUEAR: Whoís going to go first?
A R T H U R W I N K L E R: Well, I will address off-track wagering. Bruce
can address the other issues that you outlined.
Whatís your preference, in terms of--
ASSEMBLYMAN GUEAR: Go right ahead. You can start. Thatís
MR. WINKLER: I think the status of off-track wagering was your
concern. Thatís a matter Iíve been handling.
ASSEMBLYMAN GUEAR: Would you just state your name?
MR. WINKLER: Sure. Itís Art Winkler, Senior--
ASSEMBLYMAN GUEAR: Push your button. (referring to PA
MR. WINKLER: It turned red.
ASSEMBLYMAN GUEAR: Thatís good. We do things backwards
MR. WINKLER: Okay. Red means stop.
The off-track wagering and account wagering bill passed in -- was
signed into law, August of 2001. It became effective six months later, in
February of 2002.
The Sports Authority, under the terms of that law, is the only entity
eligible to apply to the Racing Commission for either the account wagering
license or for the off-track wagering licenses. And the law provides that there
shall be, or may be, up to 15 off-track wagering facilities.
However, the law also provides that while weíre the only entity that
can apply for a license, a precondition is that we reach a participation agreement
with other parties. In the case of off-track wagering, we need to reach an
agreement with the people who own and operate Freehold Raceway, and the
people who own and operate Atlantic City Race Course. For account wagering,
we need to reach a participation agreement with the people who own and
operate Freehold Raceway.
The participation agreement, in general form, is to account for how
the parties will share in expense, revenue, operational, and management
When the law was passed and became effective, we negotiated with
those parties for both systems. And the concept in the negotiations, at least for
off-track wagering, was that the parties -- two of the parties would become
partners in a certain number of the facilities. And one party, Atlantic City,
would own and operate others by itself. In terms of account wagering, the
concept was that we would -- because there can be only one account wagering
system, and it would be a statewide system -- that we would have a joint venture
To be frank, in the course of the negotiations on off-track wagering,
we discovered that we couldnít reach an accord as to how to become partners,
what the economic arrangements would be between us, and what the
management and operational issues would be, and how they would be resolved
About that time, Mr. Zoffinger came to the Sports Authority. And
we talked about it with him, and we decided to pursue a different course on offtrack
wagering -- and that is to determine whether there was a way of allocating
the 15 facilities among us, so that we could each own and operate a certain
number of them independently. And we believe weíve reached an agreement,
with regard to that. We have a concept that, we think, works. And at this
point, we have lawyers trying to document our concept. And it would be as
follows: The law allows up to 15 off-track wagering facilities. The New Jersey
Sports and Exposition Authority would, exclusively, own and operate nine of
them. The company that owns Freehold Raceway, and also operated -- held the
racing license at Garden State Park in the year 2000, would own and operate,
exclusively, four facilities. And the company Greenwood, that owns and
operates Atlantic City Race Course, would exclusively own and operate two
We also reached an understanding as to where each of us would
locate our facilities, essentially, on a county basis. And that-- As I said, that
understanding is, now, in the process of having lawyers try to see whether it can
be reduced to a specific agreement. There are some issues that, yet, have to be
resolved regarding that concept. But thatís where we are with off-track wagering.
With account wagering, which some people callphone wagering,
weíve also reached an understanding with that one entity that we have to make
a participation agreement with, and thatís Pennwood. And the understanding,
at this point, is that we would have one phone system. It would likely be
located at the Meadowlands. And we would have a joint venture or partnership
that was a 70-30 partnership, with the Sports Authority being the 70 percent
interest holder and the Pennwood company being a 30 percent interest holder.
And that, by way of outline, Mr. Chairman, is the status of offtrack
wagering and phone wagering.
ASSEMBLYMAN GUEAR: Okay.
Any questions from the members of the Committee?
ASSEMBLYMAN ASSELTA: Yes, Mr. Chairman.
ASSEMBLYMAN GUEAR: Assemblyman Asselta.
ASSEMBLYMAN ASSELTA: Good afternoon, Mr. Winkler. How
MR. WINKLER: Good. How are you, Assemblyman?
ASSEMBLYMAN ASSELTA: A few questions and, eventually, get
to the real difficult question.
You mentioned earlier, this -- the OTB and the account wagering
was pretty much on track after the legislation was passed. You, kind of, knew
where you were going to site these facilities. Arrangements, at that point, with
the appropriate entities were in place at that point?
MR. WINKLER: Actually, if thatís what I said, I didnít mean to
say that. We were pursuing a concept where we would try and partner on many
of the facilities. Twelve of the facilities would be a joint venture between us and
Pennwood. And we had some thoughts about where some of them might be
located, but no specific plans with regard to any specific venue.
As you know, we visited one of your communities and explored
some opportunities there, but I donít think there were any real specifics to doing
ASSEMBLYMAN ASSELTA: Well, staying with that theme, have
you picked the sites yet? You mentioned sites earlier.
MR. WINKLER: On the basis of the Sports Authorityís nine sites,
we have not.
ASSEMBLYMAN ASSELTA: So these are just theoretic sites
around the State of New Jersey that you still havenít located yet.
MR. WINKLER: The process is a bit complicated. If we reached
this written agreement with the other parties -- this participation agreement -- we
would have to present it to the Racing Commission for its review and approval,
and the review and approval of the Attorney General. If that, sort of, master
agreement, if you will, was approved, we would then have to come in with
specific site locations for the 15. And if that agreement was reached, the Sports
Authority would be responsible for coming in with nine locations. The other
parties would have their own locations.
Before doing that-- If you recall, there are provisions in the law that
require us to go to the municipalities that are affected, to the governing bodies,
site where we want to locate them, present plans and specifications, and the
municipal governing body has the opportunity to say no. So, because we
havenít reached this master agreement, we really havenít pursued those
ASSEMBLYMAN ASSELTA: So letís take this step by step. The
master agreement gets created. You then need to go to each individual
municipality to begin siting these facilities.
MR. WINKLER: Actually, we have to first find the site.
ASSEMBLYMAN ASSELTA: Find it.
MR. WINKLER: Letís say 100 Main Street.
ASSEMBLYMAN ASSELTA: Which I think you already have that
geographic idea from two years ago. The demographics and geographic
economic implications havenít changed much, I donít think, have they?
MR. WINKLER: No.
ASSEMBLYMAN ASSELTA: Okay. So then you must engage in
municipal interaction that could take quite a bit of time.
MR. WINKLER: Right.
ASSEMBLYMAN ASSELTA: Meanwhile, whatís the per-year
economic impact of these facilities on the State budget? What could it create
MR. WINKLER: Well, frankly, I defer to Bruce, in terms of what
we would anticipate economically from off-track wagering. Obviously, by not
implementing it, there has been some-- The delay has caused us, at the
racetrack, and others to lose the opportunity for some income. To tell you the
truth, I have no--
ASSEMBLYMAN ASSELTA: Do we have an estimate as to--
MR. WINKLER: --analysis of that. The facilities, really, would
require, depending on the size, probably $4 million to $6 million in capital
costs. And thereafter, depending on whether the market was wisely chosen,
some economic benefit going forward--
ASSEMBLYMAN ASSELTA: Substantial economic benefit.
MR. WINKLER: The real substantial benefit would come after the
system has become mature. It really becomes an incremental growth. To some
extent, some of the income would be offset by what might happen at the
racetrack. You could lose business at your racetrack by operating off-track
ASSEMBLYMAN ASSELTA: Well, are we staying with that
economic theme? Are we losing business, today, as we sit here? Are our New
Jersey residents going across the bridge to Pennsylvania and spending their
dollars over there, today?
MR. WINKLER: I donít think any more are going across the river
now than were--
ASSEMBLYMAN ASSELTA: I didnít ask you any more. I asked
you are there dollars being lost today -- as we sit here today -- going across the
bridge every day -- Vets Stadium, Turf Club next to Vets Stadium, etc., etc.
MR. WINKLER: Yes, the answer is yes.
ASSEMBLYMAN ASSELTA: Okay, and itís pretty substantial.
MR. WINKLER: I couldnít--
ASSEMBLYMAN ASSELTA: We donít have a way to quantify
MR. WINKLER: I donít have it quantified.
ASSEMBLYMAN ASSELTA: So after two-plus years of signed
legislation -- and I guess youíre using the reasoning that there was a changeover
at the Authority -- Mr. Zoffinger came in and changed the philosophy on how
this would be struck--
MR. WINKLER: I donít think I said that. I said that when we
tried to reach a participation agreement along certain conceptual lines, we were
unable to do it. We were negotiating with the other parties and could not reach
an agreement as to how we would own and operate, in a partnership, those
facilities. We couldnít. And thatís when we decided to pursue a different course
of action, which, as I described, would be, essentially, allocating 15 among us
so that we can own and operate independently of each other.
ASSEMBLYMAN ASSELTA: Okay. Through the Chairman-- Mr.
Chairman, are we going to address the proposed sale of these particular facilities
-- the racetracks -- in this particular testimony, or someone else? Or can we call
ASSEMBLYMAN GUEAR: I believe weíre going to talk about that
now. But I do have--
Are you through, Assemblyman?
ASSEMBLYMAN ASSELTA: Yes.
ASSEMBLYMAN GUEAR: One quick question. How are the
counties divided between the Authority and Pennwood?
MR. WINKLER: The Atlantic City Race Course ownership would
have the opportunity for two facilities to be located in any of the following
counties: Atlantic County, Cumberland County, Cape May County, and Salem
The Pennwood Company, which owns and operates Freehold
Raceway, would have the opportunity for up to four facilities to be located, as
they see fit, subject to the regulatory approvals, in Burlington, Mercer, Camden,
Gloucester, Southern Ocean, and Southern Middlesex counties.
The Sports Authority -- nine facilities would be located in Northern
Middlesex, Northern Ocean, and all the other counties that went unmentioned,
with the exception that weíve agreed that no one will site a facility in
Monmouth County, which is the home of two racetracks. And the thought is
that we would not want to build one close to those facilities and jeopardize their
business in a serious fashion.
ASSEMBLYMAN GUEAR: Okay.
Any other questions?
Assemblyman Van Drew.
ASSEMBLYMAN VAN DREW: Through the Chair, talking about
that master agreement, can you be a little more specific what the problem is,
why the agreement canít be met? I think what weíre all alluding to here,
obviously, is-- Weíve been challenged by the Governor, and challenged in
general, to find sources of revenue. And the longer that we wait to do this, the
less revenue, obviously, is coming to the State of New Jersey, and the less
MR. WINKLER: I didnít intend to say that it canít be met. Thatís
a conceptual agreement that weíve now reached, and we are exchanging drafts
of contracts between us and trying to--
ASSEMBLYMAN VAN DREW: So do you have any guesstimate,
estimate, on what time factor would be involved in that? Do you have any idea
in the back of your head that--
MR. WINKLER: Do you know-- Iím sorry.
Assemblyman, Iíve lived with this for three years and given
guesstimates before, and theyíve never been right. Hopefully it can be worked
out soon. Weíre narrowing the issues, as you know.
ASSEMBLYMAN VAN DREW: Going back -- excuse me -- going
back previously, through the Chair, what were the issues? Iím trying to -- Iím
just trying to understand a little bit better why it was such a problem, for such
a long period of time, to get this done.
MR. WINKLER: In this particular arrangement?
ASSEMBLYMAN VAN DREW: Yes.
MR. WINKLER: There were other issues when our concept was
different. We need to reach an accord on things like indemnifications, how to--
The law provides that thereís a sharing of racing costs incurred by the Racing
Commission. We have to decide how weíre going to allocate those costs among
us. Weíre talking about the term of an agreement, and weíre talking about what
happens in the event any party to the agreement divests itself of its racing
interest. So I think those are the things that, at this point, probably need to be
ASSEMBLYMAN VAN DREW: Okay.
The other statement you made, as well, was, through the Chair,
when the system is mature, there would be a significant financial benefit. Could
you define, in your terms, what you mean by mature?
MR. WINKLER: By mature?
ASSEMBLYMAN VAN DREW: Yes.
MR. WINKLER: Mature means developing the whole system, or
nearly the whole system.
ASSEMBLYMAN VAN DREW: Once that agreement was met --
and, again, Iím thinking in fiscal terms -- what this is going to bring, in revenue,
to the State of New Jersey. Say the agreements were met today, and everything
signed, and weíre ready to go, when do you believe the system would be mature?
Do you have any sense of that?
MR. WINKLER: I donít. I would defer to Bruce. I work for the
Sports Authority, and if this agreement were signed, we would have the right and
opportunity to develop nine facilities. Weíd have to find a way to finance those
nine facilities. So I think it would take not months, but years for us to work
through all the approval -- find the sites, gain the approval of the municipal
governing bodies, and then go to the Racing Commission for their approval. So
it would not be a mature system in the immediate future.
ASSEMBLYMAN VAN DREW: Okay. Because of the fact of all
the regulatory process and the bureaucracy that you would have to go through
to reach the point of even building them and having them in place, weíre not--
In that answer, you didnít really address once they were in place, when we
would really start receiving some significant revenue back to the State of New
Jersey. And do you have any projection of that at all? These arenít numbers
somebodyís going to come back to you in a few years-- The way weíre going,
we wonít be coming back to you in a few years, because they wonít be here in
a few years.
MR. WINKLER: Iím lawyering it. Bruce is the guy who operates
the racing division for us. I would defer to him.
MR. GARLAND: In answer to both your questions, there are some
considerations that we would want to take into account. One is to evaluate the
impact of the first set of off-track wagering facilities on the live racetracks and
the live racing, itself. The main part of any systemís business is the live racing.
You want to preserve live racing. Iím sure there are horsemen in the audience
who want to testify today to encourage you to help provide for even more live
racing. But we want to make sure that the racetracks, themselves, arenít
negatively impacted, because there will be some cannibalization of your live
handle by making it easier for people to go to these facilities. So we want to
make sure of that impact.
So our intent would not be to build nine facilities immediately, but
rather, to build them, probably, in general terms, in, like, a concentric circle,
beginning further away from the racetracks and moving in. After each round of
construction, having an evaluation process, at that point-- So I would say it
would probably take five years before a system was mature. Weíd probably try
and do four or five, initially. And then maybe a couple more after that, and a
few more after that. And in terms--
ASSEMBLYMAN VAN DREW: Through the Chair, Bruce, when
you say five years, do you mean it would be five years before it was even --
construction began, or--
MR. GARLAND: No, sir.
ASSEMBLYMAN VAN DREW: --five years, and weíre really
starting to see some revenue return?
MR. GARLAND: Five years before you built nine of them. In
other words, I think youíd probably want to build four or five initially, evaluate
those further away from a racetrack -- evaluate the impact on the racing, and
then move closer to the racetracks if that seems feasible. If the impact on the
live racing was so severe, you might want to reconsider that.
But I would say, in racing terms, and in terms of Sports Authority
revenue, you could be talking in the $15 million to $25 million range. Thatís
a broad number. And from purse money, probably somewhere in the $20
million range, of a fully mature system.
ASSEMBLYMAN VAN DREW: Okay.
May I, Mr. Chair?
ASSEMBLYMAN GUEAR: Sure.
ASSEMBLYMAN VAN DREW: Let me make sure I understand
this properly. For example, in the most southern end of the state -- if we were
to look at the Cumberland, Cape May, Atlantic area -- and somebody was to
ask me, as an Assemblyman, when I thought we were going to see the first one,
and I called you up and said, "Could you give me a guesstimate of when that
would be," what would your answer be?
MR. GARLAND: Well, my answer would be thatís a different
company, but I suspect that company will build them as fast as possible.
MR. WINKLER: Remember, under the concept that weíre working
with, the Sports Authority--
ASSEMBLYMAN VAN DREW: Wouldnít be doing -- I
understand -- those down there.
MR. WINKLER: Wouldnít be doing that.
ASSEMBLYMAN VAN DREW: That would be Atlantic City.
MR. WINKLER: Essentially south of Middlesex, Ocean.
ASSEMBLYMAN VAN DREW: So you wouldnít be able -- we
wouldnít really be able to answer that at this point, right now.
MR. GARLAND: I believe that the concern that I have for the two
Sports Authority racetracks would not be that applicable in that area, because
Atlantic City doesnít have the concern of a live racing or an extended live racing
season. And I suspect that they would fast-track their facilities.
ASSEMBLYMAN VAN DREW: Chairman, this will be my last
What Iím trying to say is, wouldnít it make sense, at the most
extreme ends of the state -- where the farthest away -- to get those underway as
soon as possible, because they arenít going to have an effect on the live racing?
Theyíre too far away.
MR. GARLAND: I would tend to agree with you, Assemblyman.
ASSEMBLYMAN VAN DREW: So what I would hope is that we
would get those moving as soon as possible, or allow those that are going to do
it to get it moving as soon as possible.
MR. GARLAND: Yes, sir.
ASSEMBLYMAN VAN DREW: Thank you, Chairman.
ASSEMBLYMAN GUEAR: Assemblywoman Stender.
ASSEMBLYWOMAN STENDER: Thank you, Mr. Chairman. I
apologize for coming in late, because I was at another Committee.
I know that I came in in the middle of a testimony, but when youíre
speaking about getting these up and running, it strikes me that you sound like
youíre talking about something that youíre in the thinking-about stages, or when
it gets here. But didnít we pass this two years ago?
MR. WINKLER: It was signed into law in August of 2001. It
became effective in February of 2002. There was a six-month effective -- there
was a six-month period before it became effective.
ASSEMBLYWOMAN STENDER: And at the time, what was the --
when it was passed, or approved -- what was the Legislature then told we could
expect as a reasonable time frame before this would be in place?
MR. WINKLER: Frankly, I donít recall that we offered a time
frame. I think we said what Mr. Garland just said, and that is that it would
require capital resources, and it would take time to build up 15 different
facilities. And I think that time frame was, basically, what he just said now,
that it would take approximately five or six years to fully develop a system.
ASSEMBLYWOMAN STENDER: Oh, I thought he had-- Iím
sorry, I thought that I understand that it would take five or six years for it to be
fully mature. But there must have been some expectation of a window or time
frame in which it would get started.
MR. GARLAND: The expectation was that the account wagering
portion of it, which is just a relatively small portion of it, would be able to be
done relatively quickly: six months or so from the time of participation
agreement being fully implemented. An account wagering system could be
started very shortly after -- as soon as a participation agreement is done, and we
go through the process of application in the Racing Commission and follow the
statutory time periods.
ASSEMBLYWOMAN STENDER: I guess my question, then, is
that given this -- the crisis that we face with the horse racing industry in this
state, and knowing that this is intended to help the industry, whatís the
problem? How come weíre now a year and a half out, and thereís not even one
up, if you thought you might be able to get one up in six months?
MR. GARLAND: That would not be the off-track wager site.
Thatís account wager. Account wagering is not a separate facility. But, again,
Iím not part of the-- Thereís something that needs to be done before I can get
involved, and thatís a participation agreement, and that is not yet signed.
ASSEMBLYWOMAN STENDER: And whoís responsible for that?
MR. GARLAND: Well, Mr. Winkler represents the Sports
Authority in that process.
MR. WINKLER: I think you, perhaps, didnít hear--
ASSEMBLYWOMAN STENDER: I do apologize for coming in
late. So I did miss that.
MR. WINKLER: The law requires that we canít unilaterally do this
at the Sports Authority. It requires entering into a contract for off-track
wagering with two other parties, and for account wagering with one other party.
I tried to explain that we tried to negotiate, in good faith, as did the other
parties, that participation agreement, which involves sharing economic risk,
economic gain, management and control responsibilities. And we initially tried
to do it as, basically, a partnership or joint venture. And we discovered that we
couldnít reach that kind of agreement. We had too many issues that divided us
about how it would be managed, controlled, who would determine which sites
would be selected, which sites would go first. And so we changed course and
came up with a different concept, which is to try and arrange that the 15 are
allocated among us, and that we end up running our own, exclusively -- each
party. In our case, at the Sports Authority, nine. And among the other two --
between the other two parties, a total of six. And weíre, now, exchanging drafts
of contracts to try and pursue that.
ASSEMBLYWOMAN STENDER: So can you -- are you able to
give us an idea of when the first one will then be done, having gone through --
gotten to this point?
MR. WINKLER: If we sign that agreement, it has to be presented
to the Racing Commission and the Attorney General for their review and
approval. If it is approved, it will be, sort of, a blueprint for how to go forward
with the 15 specific sites. And then each party would present their site locations
to the Racing Commission. And I think, as Bruce Garland indicated-- I believe
that the private entities are prepared to go forward quite promptly with
ASSEMBLYWOMAN STENDER: What does that all mean in
ASSEMBLYMAN VAN DREW: Theyíre not going to tell you.
Respectfully, weíre going to have each Assembly person ask you
this, until we get a more definitive answer. And then weíre going to go back to
Assemblyman Asselta again. Heíll start all over again.
ASSEMBLYMAN ASSELTA: Welcome back.
I do have another question, Mr. Chairman.
MR. WINKLER: Iím not really trying to duck the question. Itís
an answer thatís very difficult. If we piece it out, I think, hopefully, we can
reach a contract with the other parties reasonably soon and present it to the
Racing Commission and the Attorney General for approval. Again, that would
be approval, by them, of a blueprint or a master plan. Then each partyís going
to have to go out and find sites. And when they find the site -- letís say they
find an empty food market in town X, that that party thinks can become an offtrack
wagering site, weíll have to go to the municipal governing body.
ASSEMBLYWOMAN STENDER: I heard that part.
MR. WINKLER: You have to reach an understanding with the
landlord or the owner to rent it. Then you have to go to the governing body of
that town and say, "We found a site at 100 Maple Avenue in your town. Hereís
what the plans look like. Hereís the way it will be operated." And then thereís
likely to be hearings there. And should the municipal governing body approve,
then we have to go to the Racing Commission, which has an obligation, under
law, to hold public hearings.
So the best I could tell you is weíre hopeful of reaching an
agreement soon, presenting it to the Racing Commission, and then, after that,
trying to find sites in municipalities that are pleasing to the municipality, and
then go to the State for its approvals.
MR. GARLAND: Iíll try and give you an operational answer. Once
the participation agreement is done, it would be my goal to have an account
wagering system up within three months of the signing of the participation
agreement. And then, depending on whether or not we had to lease or build
facilities, within six to eight months from the time period, try and be operational
in at least three or four of the facilities as quickly as possible.
I canít speak for the other entities involved, but my knowledge of
the way they conduct their business -- they will have similar, if not faster,
timetables for their areas. And I think everybodyís just anxious to get it moving
forward. I donít want there -- the impression that weíre not anxious to move
forward. We are. Weíd set goals. Theyíd be goals I hope we could meet.
ASSEMBLYWOMAN STENDER: Thank you.
ASSEMBLYMAN VAN DREW: Thank you.
Jack -- Assemblyman Conners, did you--
ASSEMBLYMAN CONNERS: No, Iím okay.
ASSEMBLYMAN VAN DREW: Assemblyman Asselta.
ASSEMBLYMAN ASSELTA: Iím fine. Thank you, Mr. Chairman.
ASSEMBLYMAN VAN DREW: Okay.
Any other questions on this subject? (no response)
Weíre going to move forward now to the discussion of the sale of
the racetracks. And I would let you proceed. You can begin.
MR. GARLAND: Sure.
I think the first thing that I should probably say on that regard --
and that is, that no decision has been made to sell or lease the racetracks.
While there has been some publicity in that regard, and there have been some
entities that have expressed interest, the Sports Authority hasnít made any
decision and, really, would not make a decision of that magnitude without
consultation with the administration, the appropriate members of the
Legislature, and all the various other bodies involved.
So I think with that as a preface, Iíd be happy to answer any
specific questions any of you might have on the sale or anything else. But no
decision has been made.
ASSEMBLYMAN VAN DREW: I know there was a good deal of
press and publicity regarding that. Could you explain what sparked all that
MR. GARLAND: Well, I donít know--
ASSEMBLYMAN VAN DREW: I assume youíre having
discussions concerning the possible sale.
MR. GARLAND: I donít know what sparked the activity. There
has always been interest in our two racetracks. Frankly, the interest has been
because the two racetracks are very successful entities. The Meadowlands is the
largest single location for wagering -- pari-mutuel wagering in North America.
And Monmouth Park does produce a positive revenue cash flow. It always has,
under the Sports Authority operation, and is a high-quality meet. And to use,
probably, a poor analogy -- but itís, sort of, like the Fenway Park of racetracks.
Itís a beautiful facility -- seasonal facility. So thereís always been interest in our
At the current time, there are two major entities that have been
acquiring racetracks, and have been for the last several years. Churchill Downs
is one of them. They have six racetracks currently. And Magna Corporation is
the other entity -- major entities. And then, from time to time, there have been
other people express interest.
At its last board meeting, the Sports Authority authorized a contact
with investment banking firms to begin a process of getting somebody to help
advise us on valuation, marketability, that type of thing. So that may have been
what sparked it -- that, and just good, probably, reporters who are out seeking
a good story.
ASSEMBLYMAN VAN DREW: They are profitable.
MR. GARLAND: Yes, sir.
ASSEMBLYMAN VAN DREW: They do well. They do well for
the SEA. Why then would you sell them, just for the immediate--
MR. GARLAND: Well, again, no decision has been made to sell
ASSEMBLYMAN VAN DREW: I know no decision was made, but
there was a decision to pursue this.
MR. GARLAND: Right, because there is interest.
ASSEMBLYMAN VAN DREW: And what sparked that decision?
MR. GARLAND: Just the interest, the fact that we are a public
agency, we own two racetracks that are valuable commodities, they do produce
positive cash flow for the Sports Authority, and weíd like to know what the
valuation and process would be if we were to actually go through the process of
selling them. So this is just hiring an advisory investment banking firm to just
help us in that regard and to determine what steps to take, were a decision to be
made to actually pursue this.
ASSEMBLYWOMAN STENDER: I have a question.
ASSEMBLYMAN VAN DREW: Assemblywoman Stender.
ASSEMBLYWOMAN STENDER: Thank you.
Aside from the fact that the money, apparently -- the interest is in
the amount of money that can be secured to offset debt -- I mean, thatís what
the press says, anyway.
Iím interested in what the impact would be to people who go to the
tracks. I mean, I am very concerned when I think about, for instance, selling
the Garden State Arts Center, and the fact that people who now go there are
mostly aggravated in dealing with getting tickets, and access, and all the rest of
it. I would be concerned that an asset that was built by the taxpayers, and is
used by our residents -- because it would now be in private hands -- would have
their access changed, and the operation changed, in a bad way.
MR. GARLAND: Again, I would not be the decision-maker in that
regard. Thatís not going to be -- way beyond me. But I would say, one of the
considerations that the State should certainly be interested in is what the intent
of the parties would be with regard to: harness and thoroughbred racing,
horsemen, horsemensí interest, the future of live racing in the State of New
Jersey, and all the surrounding businesses that would be impacted; and what
their concerns are with the employees who are currently employed at the various
locations, and what their concerns would be to the guests and the patrons and
the fans of racing. I think those are things that should be considered.
But, again, no decisionís been made to enter into that process.
ASSEMBLYWOMAN STENDER: Thank you.
ASSEMBLYMAN VAN DREW: Assemblyman Asselta.
ASSEMBLYMAN ASSELTA: Mr. Chairman.
This proposal has two more implications aside from horse racing,
at least the way I see it. And Iíll just make this statement, because I donít think
youíll answer my questions anyway. (laughter)
MR. GARLAND: I will certainly try, Assemblyman.
ASSEMBLYMAN ASSELTA: Two implications-- Number one, we
know the Sports and Exposition Authority also owns the Atlantic City
Convention Center and the Wildwood Convention Center -- which, normally,
most convention centers operate in the red. Consequently, the Meadowlands,
and the horse racing industry, and those facilities help prop up those two other
facilities and entities to keep them, obviously, afloat and financed.
Weíre already having a difficult time securing marketing funds for
those facilities. So I see this as a possible problematic issue down the road in
relationship to those two entities -- will they fall further in the red and must be
propped back up by State government, number one.
Number two, I see the sale of these two facilities as a preclude to
VLTs and video lottery. I donít think, whoever is the negotiating agent here,
with the appropriate partners -- I believe theyíre using that as an enticement to
purchase, with the hope that, someday -- and probably a pretty strong hope --
that VLTs will be placed in these facilities, which would, obviously, enhance the
investment and the value.
So itís much more than horse racing here -- this initiative. And
there are deep concerns, on my part, on two fronts. Obviously, the Wildwood
Convention Center is in our district -- the Chairman and myself -- and we have
to make absolutely sure that facility remains viable. The Atlantic City
Convention Center sits in the district above us and employs people in our
legislative district. And, most importantly, the gaming industry is South Jerseyís
number one industry, employing over 60,000 people right now. And VLTs, as
testimony has come forward by casino executives, would absolutely kill further
investment in the industry and currently cripple whatever new profits will be
So this initiative, at least on the surface, seems to have two major
negative impacts on South Jersey, and the first and second legislative district.
And Iíll just make that statement.
You can respond, if you want.
MR. GARLAND: Sure. In regards to Atlantic City and Wildwood-
- Iím the operator of the racing. Itís my goal and job--
ASSEMBLYMAN ASSELTA: Right.
MR. GARLAND: --to produce as much revenue as I can for the
Sports Authority so that they can allocate it to any other purposes that our
board sees fit. Racing does return a substantial revenue, and they have used it
in the past for those types of things. But in terms of actual operation, or those
things, itís out of my realm.
ASSEMBLYMAN ASSELTA: I understand.
MR. GARLAND: In terms of VLTs, slot machines, that type of
thing-- Right now, my focus is on how to deal with the competition of those
things in other states. So Iím not really involved in the process of bringing them
to New Jersey, or any of the issues surrounding that. What Iím trying to do is
develop a plan so that we can survive being surrounded by them.
ASSEMBLYMAN ASSELTA: Great. Thank you.
ASSEMBLYMAN VAN DREW: Anybody else? (no response)
Thank you, both, for being here today.
MR. WINKLER: Thank you.
MR. GARLAND: Thank you, sir.
ASSEMBLYMAN VAN DREW: I guess the thought that we would
leave you with -- many of them -- going back to the other subject, is offtrack
betting-- It is a source of revenue. We are very short of funding in the State of
New Jersey, and we would like to see this happen, as soon as possible, especially
in those areas where there, obviously, arenít any problems geographically, that
MR. GARLAND: Yes, sir. Thank you.
ASSEMBLYMAN VAN DREW: Thank you.
And we would appreciate if you could stay, because we might ask
you to come up again if there are further questions.
MR. GARLAND: Certainly.
ASSEMBLYMAN VAN DREW: Now we have Barbara DeMarco,
from the New Jersey Thoroughbred Horsemen; and Leon Zimmerman and Mike
Izzo, from the Standardbreds. If you could all come up together -- I know
youíll speak separately with a different voice and a different vision -- but I think
you can share the table together.
ASSEMBLYMAN ASSELTA: Share the love.
B A R B A R A D e M A R C O: I think Leon is going to be a gentleman and
let me start.
Thank you, Mr. Chairman, for dedicating an entire meeting to the
important issue of the future of horse racing.
This weekend, while most horse racing enthusiasts were greeted with
unlimited media coverage of the Kentucky Derby, and the unlikely win of a
New York-bred by the name of Funny Cide, those of us in New Jersey were
confronted with this: the sale of our racetracks, or the potential sale. To say the
least, while New York and Kentucky were rejoicing, New Jersey horsemen were
filled with overwhelming concern, because the sale of Monmouth Park -- and
Iím speaking thoroughbreds -- could, potentially, be the last nail in the coffin
for New Jerseyís industry.
However, before I address why New Jerseyís thoroughbred
horsemen oppose the sale of the racetracks, let me touch on the first two issues.
As I stated in my opening remarks, thoroughbred racing is thriving in those
states that have made an economic commitment to it, states like Kentucky and
New York. Unfortunately, New Jersey stopped taking an interest in this
industry when it legalized the lottery and casino gaming in the 1970s. The
casino industry killed a healthy New Jersey racing industry. We have seen the
closure of two racetracks in southern New Jersey -- Atlantic City is all but
closed, and Garden State is closed.
As John McLaughlin wrote yesterday in his column in theStar-
Ledger, "As the casinosí take sweetened, horse racing soured. Pari-mutuel
machines are no match for one-armed bandits. Slot machines have dictated the
personality of New Jerseyís casinos. They have sucked enough gambling dollars
to cripple racing. Their presence in neighboring states have racing and casino
interests here at each otherís throats. If the slots are permitted at the New Jersey
tracks, customers get stolen away from Atlantic City. If not, racing dies, and the
casinos still lose the customers to other states. The sale of the tracks will
doubtlessly cause even more delay. Letís hope there are still some racehorses
available when all this is sorted out." And that is a future we are dealing with,
as horsemen in the state.
Letís move to the second issue, OTB and Phone Bet. I want to
dispel some information that appeared in this article in theStar-Ledger. In 2001,
the Legislature determined that 141 days of thoroughbred racing was
appropriate. Running these 141 days, as mandated by OTB and Phone Bet, is
not the reason why OTB and Phone Bet is not up and running. Last year, the
Sports Authority ran the 141 days. The thoroughbred meet closed in November.
It doesnít open again until this month. Therefore, they had six months to get
the phone portion of it up and running. The OTB, as Art told you, is much
With respect to this yearís meet, weíve agreed to 120 days, but the
remaining 21 of our days are now going to become harness-racing days. So the
NJSEA isnít saving any money by not racing thoroughbreds.
The real reason is the participation agreement. Our feeling is that
the reason the participation agreement has taken so long is because the same
people, who own the racetracks and OTB parlors in Pennsylvania, own the
privately owned racetracks here in New Jersey. Most people believe that the
incentive -- there was no incentive to open the OTB quicker, because when
Garden State Park closed -- located in Camden County -- the Garden State Park
patrons, instead of driving to the race book rooms at the casinos, or to Freehold,
or Monmouth, or Meadowlands, decided it was easier to cross the Ben Franklin
bridge and bet at their OTB location in Philadelphia or at Philadelphia Park, the
racetrack located about 15 minutes from here, and about a half an hour from
Cherry Hill. As a result, the $90 million made yearly at Garden State Park is
now going to the Pennsylvania track owners. And I think that was a question
We understand, now, that there are also delays because there are
certain bigwigs out there who want to pick their own OTB locations. We also
understand that there are other leading contenders who have some interest in the
participation agreement, and they want to get a part -- and whether or not they
sign it. All of this is all hearsay, and itís not -- I cannot validate it.
The final issue is the sale or the lease of the racetracks. My
comments will focus on Monmouth Park, because we are talking -- theyíre
strictly thoroughbreds. The horsemen oppose the sale, and Iíll tell you why.
Thereís no guarantee that the new owner wonít demolish Monmouth Park and
replace it with high-priced condos or housing. The facility sits on a valuable
piece of property less than one mile from the ocean, on a train stop with less
than a hour commute to New York.
There is no guarantee that the facility will conduct live racing with
a full calendar of dates so that New Jersey horsemen and breeders can make a
living. For this one, you need to think like a farmer. If a horse were a piece of
produce -- an orange, an apple -- you would need a supermarket to sell your
product. If your supermarket closes, or they start decreasing the number of
hours theyíre open, so that you can -- that the consumer can buy a product,
thereís less incentive to go there, or thereís no incentive at all, because the
market closes. Horse racing is the same. Our market is our racetrack. If they
close, thereís nowhere to sell the product. And not only do the horsemen go, the
wagerer goes. But many take their farms and their families with them to other,
more profitable states.
Monmouth Park -- number 5 (sic) -- is over 50 years old and needs
about $50 million in improvements to bring it up to 2003 standards. If the new
owner decided to keep it as a racetrack, will they put the improvements into the
facility so it doesnít become another Atlantic City Race Course, where the
concrete you stand on crumbles under your feet?
Four, the most likely bidders will be conglomerates from other
states or countries. What vested interest do they have in New Jerseyís racing,
farming, breeding, travel and tourism, and our Stateís economy? Are they here
just to take our bets and wagers?
Five, will the potential owner allocate enough money to keep New
Jerseyís purses competitive with the region? As Bruce said, our biggest concern
is that every state around us is a racing state. They will all have VLTs or slot
machines within the next two years. What will that impact have on us? And
if the new owner doesnít put enough money into purses, weíre going to die
anyway, because we wonít be able to compete, because racing is a regional
sport, and the horses and the owners follow the money.
Six, will the sale be done on the horsemanís back? Will they do
away with current incentives or reduce breeding incentives? Will the new owner
pull a gimmick like they do at Gulf Stream, where they encourage the bettor to
bet on an 800 number over a credit card, rather than with cash at the racetrack
window? Every time this is done, a third of the money doesnít go into purses.
Six, (sic) some of the potential bidders on the tracks have not
proven themselves in other states, and I called most of the racing jurisdictions
in the area to find this out. One of the examples that kept coming up was the
Magna Corporation. Magna, which owns Gulf Stream and Santa Anita, bought
the tracks, promising infrastructure improvements on both the front and back
side of the track. They promised better purses and better conditions for
horsemen. Theyíve done very little of what they promised. As a result, their
handle, the total amount wagered, and their attendance are down 10 percent.
Their stock, when compared to some of the other corporations investing in
racetracks, is down, reflecting a lack of consumer confidence. And Iíve
included, for you, the stock comparison.
Will they improve New Jerseyís racing? They certainly arenít
improving it in other states. And is that a risk you want to take when your
industry is so fragile?
And, finally, the procurement process is probably the most
important issue. Last year, the State Commission on Investigation published a
scathing review of bidding irregularities surrounding the Parsons infrastructure
Motor Vehicle contract. The SCI reported these problems: a small universe of
bidders, hiring of politically connected consultant/operatives and lobbyists,
excessive campaign contributions, secret meetings with senior governmental
officials where inside information was exchanged, an open-ended bid process of
poorly defined expectations, and a lack of government controls.
Given the monetary size, complexity, and nature of racetrack
procurement, a repeat of this debacle is very possible. This is why the NJSEA,
the Governor, and the Legislature should insist that, if they go forward with this,
that itís a transparent bid process, where all impacted parties are participating --
most importantly, the horsemen -- because it is the thoroughbred and the
standardbred, or harness horsemen, in the state that make up the majority of
voters, own the farms, and get the major benefit from this industry.
Finally, on the advice of our attorney, Dennis Drazin -- who is in
the room with me today -- and he can answer questions. Heís one of the leading
owners and breeders. He would like to advance a solution. Donít sell either
track. Rather, put into motion an idea advanced by Governor McGreevey some
time ago. Preserve the racetracks with Green Acres funding, since they occupy
valuable open space and promote the preservation of an additional 80,000 acres
of equine-related farmland.
By doing this, you will also retire the debt on each of the tracks,
which is around $250 million in the aggregate. By paying off the debt, you will
then be able to put approximately $3.5 million back into Monmouth Parkís
operational account yearly.
An amendment would have to be made to Green Acres to allow for
a purchase of commercial open space. The amendment would be limited to
racetracks. Once the racetracks were preserved, lease the facilities based on the
highest bid and the best use. Model it along the lines of the Meadowlands
Arena agreement. By requiring the potential bidder to put together a plan like
the one for the Arena site, they would be required to show what they are going
to do and how. Further, they would be obliged to do it.
Finally, prior to any decision to lease or purchase, all impacted
parties need to put together a package of legislation to address every aspect of
racing. If there needs to be changes in the OTB and Phone Bet Law, or if we
need to find a guaranteed new revenue source to bolster purses if we canít have
VLTs or slots, maybe the casinos will help us out. Who knows? We need help.
Everyone needs a clear idea of what is out there. The disposition
of these racetracks is about much more than the facilities themselves. The
transaction will impact gaming from the Meadowlands to Atlantic City, it will
impact current and potential State and local revenues, it will impact travel and
tourism, it will impact over 80,000 acres of open space dedicated to horse
farms, and most importantly, it will impact 6,000 individuals who make their
living directly from live racing and another 25,000 individuals who receive some
ancillary benefit from an active horse racing industry.
This proposal should not be taken lightly, because what may be a
short-term, quick, financial fix may turn out to be a long-term disaster for our
ASSEMBLYMAN VAN DREW: Thank you, Barbara.
ASSEMBLYMAN CONNERS: Barbara, I just wanted to ask you
a question. You were talking about purses. What size purse per day -- I guess,
for a thoroughbred race or a standardbred -- is required?
MS. DeMARCO: I would have to defer that to either Mr. Drazin
According to the horsemen, theyíd like to see 300 a day for
L E O N Z I M M E R M A N: You mean 300,000.
MS. DeMARCO: Three hundred thousand a day, sorry.
MR. ZIMMERMAN: We would like to see 200,000 a day as an
ideal purse structure, and the Meadowlands has been able to come pretty close
to that, and has been at that, I believe.
Bruce, is that correct?
MR. GARLAND: If I could-- Three hundred thousand a day is
what we think, this year--
ASSEMBLYMAN VAN DREW: We have to have you come
forward, please, so we can have you on the record.
MR. GARLAND: We believe that 300,000 a day, this year, is what
Monmouth Park needs, to be competitive. That number will change drastically
in the next couple years, due to the competition from the surrounding states, as
VLTs and slot machines are introduced in those states and money is then
diverted to purse money in those states.
So the number will change. Three hundred is this yearís number for
Monmouth Park. Thatís for thoroughbred racing. For harness racing, weíre
currently the highest purse structure in the world in harness racing. And that is
reflected in the fact -- and symbolic of the fact, frankly, that we are the number
one harness racing entity in the world.
So the idea is to have the highest purses possible in both sports.
That number is just right around the $200,000-a-day level. That number will
also change next year in order to be competitive, again, because the surrounding
states will have -- introduce alternative sources of funding other than racing. So
weíre trying to survive just on racing. They have racing and another product.
And thatís what I referred to, during my testimony, as what Iím trying to
concentrate on. How do we meet that competition?
This year, the Sports Authority has taken an extraordinary step in
thoroughbred racing and guaranteed a $300,000-a-day purse structure for 72
days at the Monmouth Park meet. Thatís an unheard of thing to do in racing.
The board and our President, George Zoffinger, have backed that initiative.
In harness racing, we still are the best, so we donít need to do
anything this year with our harness purses. But, again, in the future years, weíll
only see those numbers increase in order for us to be competitive.
ASSEMBLYMAN CONNERS: Bruce, Iím sorry. I didnít get your
MR. GARLAND: Garland.
ASSEMBLYMAN CONNERS: I donít know whether you, or Leon,
or Barbara can answer a question. Do you know of farms that have been
preserved with farmland preservation? Are there--
MR. ZIMMERMAN: To the best of my knowledge, there are
several hundred thousand acres of farmland that are preserved now as horse
farms. I was going to address part of that when I made my presentation.
I donít think anybody knows the numbers precisely, to the point
of -- would there not be horse racing, how many of those wouldnít be there. But
we expect that a lot of it would be lost.
See, thatís something I was going to address. The fact of the matter
is, that the horse racing industry in New Jersey is not what you see as, what I
like to call, the tip of the iceberg. Itís not those three racetracks. Itís far more
than that, that you donít see. Itís hundreds of thousands of acres that are being
preserved, itís tens of thousands of people that are being employed, and itís a
half a billion dollars in the Stateís economy.
We recognize that the casino industry produces a lot to the Stateís
economy, but it doesnít produce 400,000 acres of open space preservation. And
thatís why we think itís -- that the racing industry deserves some recognition.
And, as I said, I was going to address that, and I will in a moment.
MS. DeMARCO: Thereís only been one thoroughbred farm thatís
gone into farmland preservation, and there are people here from the Department
of Ag who can probably expand on that. But we had our first thoroughbred farm
preserved last year in Camden County.
ASSEMBLYMAN CONNERS: Okay, thank you.
ASSEMBLYMAN VAN DREW: Thank you, Assemblyman.
ASSEMBLYMAN ASSELTA: So we canít build on it.
ASSEMBLYMAN VAN DREW: This is going to be a little bit more
to Barbara, and then weíll move on. Itís a little bit of a philosophical question
here, just if you can answer this. Without-- I mean, thereís always going to be
this argument. Thereís going to be some of us who are just opposed to VLTs.
So without getting into that discussion, what would you see, from your vantage
point, as a cure, other than what you just mentioned before? What do you see
are the reasons other than the casinos -- why horse racing has gone down?
MS. DeMARCO: Actually, I asked that question of the National
Thoroughbred Racing Association, who hosted the Kentucky Derby. The
numbers havenít gone down, nationally. They actually have been increasing on
a yearly basis. Why you donít see it is that a lot of our patrons are dispersed
now. Theyíre in casino race book rooms, theyíre in OTBs, theyíre betting from
home on a phone, theyíre in the racetracks. So it isnít -- except for these big
marquis events where you see 140,000, almost 150,000, as you did Saturday at
Churchill Downs -- our people are all over, and theyíre betting.
So I take exception to that. In fact, I got on the Internet, and the
Nielsen Media Research group showed that viewership on horse racing was up
118 percent as of February of this year -- watching the pre -- what they call the
prep races for the Kentucky Derby.
ASSEMBLYMAN VAN DREW: Specifically in New Jersey, you
attribute the problems only to the casinos?
MS. DeMARCO: I think you have competition from other states.
I think the casinos, certainly, are the reason why there are no racetracks in
Southern Jersey. I think I would feel very comfortable saying that. I think that
it just became, almost because weíre not as big, or weíre not as -- such a quick
satisfaction as you might get with a slot machine. People just dismiss us. Weíre
not important, because weíre 6,000 or maybe 30,000, in the aggregate, people.
And our horse farms -- people donít make the connection between the racetrack
and the horse farm. And, actually, thatís a connection that has to be made.
ASSEMBLYMAN VAN DREW: Let me ask you this, just to be the
devilís advocate a little bit. Everybody wants to see the horse farms stay.
Everybody wants to keep the farms. Thereís no opportunity to keep the farms,
to raise the horses, and yet, maybe, perhaps, not have the presence of the tracks
as strong as they have been?
MS. DeMARCO: Absolutely not.
ASSEMBLYMAN VAN DREW: They wouldnít be.
MS. DeMARCO: You would have no market. Youíre closing your
supermarket. If you have no market to sell your product, itís--
ASSEMBLYMAN VAN DREW: The market for New Jersey horses
is New Jersey.
MR. ZIMMERMAN: Yes. Assemblyman, why would you have a
horse farm in New Jersey and not be able to race the horses nearby? Iím sure
thereís breeding done from state to state and across states, but it would make
no sense. You need the racetracks, the facilities nearby.
I would just point out to you-- Iíd like to address VLT issue later.
This is the second thing Iím going to address later. Our racing industry-- I
mean, there are studies that are shown -- and itís been documented before
legislative hearings in the past. Racing began its decline when the lottery was
implemented, and dropped even more severely when the casinos opened. Our
racing industry did not oppose casinos in Atlantic City. We thought it would
be a help the economy. And we later favored partnering with the casinos so that
simulcasting of horse races were put into a lot of the casinos. And there are race
books there. There are, in effect, OTBs in the casinos.
Now, with this great toll that the casinos have taken on the racing
industry, we feel that they -- we need help from them. I ought to point out to
you that in Illinois-- When riverboats were created by the legislature in Illinois,
without any effort at all, they gave a percentage of the riverboat gambling
money to the racing industry. Now, wouldnít it be nice if the casino industry
could give us a percentage or share with us, in some way, so that we could all
I mean, my feeling -- our feeling in the industry is that VLTs at
racetracks, partnered with the State and the casino industry -- thereís enough
money for everybody to benefit. And how long will our casino industry in
Atlantic City last once Pennsylvania and New York are fully implemented, and
people donít have to get on the buses and go to Atlantic City from midtown
Manhattan? I mean, how much longer are they going to continue? Wouldnít
it be wiser for them to be partners now with us so that we could both benefit?
I think itís increased revenue for the casinos, as well as increased revenue for the
ASSEMBLYMAN VAN DREW: Iíll disagree with you in that I
think there could be a very detrimental regional effect to the area surrounding
But Iíll entertain further--
MS. DeMARCO: Assemblyman, before he speaks--
ASSEMBLYMAN VAN DREW: Yes.
MS. DeMARCO: The only thing Iíd like to say is, in the í70s, we
were the first test case. New Jersey was the first time we took a casino industry
and put it head to head with horse racing. Our horsemen, at that time, for
whatever reason -- and Leon might know, because I was young-- (laughter) Heís
ASSEMBLYMAN ASSELTA: Mature.
MS. DeMARCO: They didnít make any protection for horse
racing, and we had no idea what impact it was going to have. It had never been
tested anywhere else in the country. As a result, now weíre looking at it, and
weíre saying, "God, we should have put a protection in," but we had nothing to
learn from. Now every other state around us has learned from it, and theyíre
putting that protection in for their horse racing industry.
ASSEMBLYMAN VAN DREW: I understand that. And just
speaking for myself, I want to see horse racing survive. We want to see the
industry stay here, but we have to protect whatís a regional economy where there
are very few other alternatives, and thatís the casino industry. Those folks that
are from that area are going to be extremely protective of that. Itís a very broad
industry that has a profound effect -- not only the economy of the state, but also
of an entire region of the state.
So weíre with you, but it has to be done in a way thatís not going
to hurt an existing industry. Thereís no point in doing that -- in competing with
But I know Assemblyman DíAmato had a question, as well as
Assemblyman Arnone. And weíll extend that courtesy to him, in the audience,
to come forward.
MR. ZIMMERMAN: Assemblyman, just one question. I just hope
I get to cover some of this.
ASSEMBLYMAN VAN DREW: You will.
MR. ZIMMERMAN: It may answer some of your questions.
ASSEMBLYMAN VAN DREW: You absolutely will. Weíre going
to come back to you.
ASSEMBLYMAN DíAMATO: Iím going to look for some help to
Itís my sense that about two-thirds of the states have casinos -- or
some form of -- thereís a house, and thereís legal gaming. Am I right about that
-- two-thirds of the states?
ASSEMBLYMAN ASSELTA: A third of the states.
ASSEMBLYMAN VAN DREW: About a third.
ASSEMBLYMAN DíAMATO: A third?
ASSEMBLYMAN ASSELTA: Well, whatever.
ASSEMBLYMAN VAN DREW: Do not.
ASSEMBLYMAN DíAMATO: A third do not.
What has happened to racing in those states, and how have those
states -- if there has been an impact on gaming -- excuse me, an impact on racing
-- what have the states done in those jurisdictions, do you know?
MR. ZIMMERMAN: Iím not an authority on this, but I can
answer to some extent, and Barbara made reference to it.
New Jersey was the only state where racing was flourishing, and
they brought casinos in. In the other states where casinos went in, there was no
strong racing industry. For example, when they tried to introduce racing in
Nevada, it failed, because the casinos were there and were strongly established.
To the best of my knowledge -- and I would defer to -- there are
other people-- I know Bruce Garland is more up on this, and Art Winkler,
because theyíve been in the racetrack management business for a long, long
time. But I know there are other states in which the racing industries were not
as established as New Jerseyís. So there probably is no analogy to be drawn to
some of these other states.
When Delaware-- Delaware, I have to tell you-- In harness racing,
their purses were about -- and I have Mike Izzo with me, Executive Director of
the Standardbred Association -- Mike, help me out if Iím wrong -- something
like 42nd in the nation in purses. They paid $80,000 a day, or night, for racing.
And they put slot machines at their racetracks, and they zoomed up to second
or third in the nation, and theyíre paying more than double that.
MS. DeMARCO: Same thing with the thoroughbreds. It mimics
it, but with bigger numbers.
MR. ZIMMERMAN: And I appreciate what youíre saying about
the regional concern in South Jersey, but your regional concern is going to be
severely impacted by Philadelphia.
Iím sorry -- 8,000 to 160,000. I beg your pardon.
So you can see the significant -- what slot machines did. And the
racing industry was not a big industry in Delaware, compared to New Jersey.
And now horses go to race there, because the purses, particularly in
thoroughbreds, are better. Theyíre not better in standardbreds, because weíve
had a very good commitment from the Sports Authority -- and the Sports
Authority needs to be commended for that -- to keep our purses number one.
But theyíre not going to be able to do it. I read in the paper the other day,
Pennsylvania, when they get their slot machines, expect it to go to 600,000 a
day in purses. Whereís New Jersey going to be? Thereís not going to be any
MS. DeMARCO: There wonít be racing.
MR. ZIMMERMAN: You wonít have anything left to save. And
I really want to address a particular point.
ASSEMBLYMAN VAN DREW: You will. Youíre going to
absolutely have that chance. Weíre just going to go through some other
ASSEMBLYMAN DíAMATO: Thank you.
ASSEMBLYMAN ASSELTA: I donít want to get in a debate with
Barbara and Leon on the trade-off between horse racing and casinos, as far as
the quality of jobs that have been created, and that everyone that works in the
industry -- casino and gaming industry-- Obviously the level of compensation
is so much higher than it was in the horse racing industry. And letís just leave
it at that, and thatís a matter of fact. And you can agree to that.
The best part of your testimony, Barbara, was really the part that
you mentioned about account wagering -- that that was a quick opportunity for
us to get running and get creating some interest back into horse racing in the
state. That didnít take a whole lot of -- building 10 facilities -- 16 facilities.
My question to Mr. Winkler -- real quick, Art. Can those
agreements-- You, kind of, capsulized everything in one major agreement. Heíll
have to come up -- but I know sheís shaking her head--
ASSEMBLYMAN VAN DREW: Mr. Winkler, come forward again.
ASSEMBLYMAN ASSELTA: You have one major agreement to get
this deal moved forward, correct? That is a combined agreement between --
with OTBs and the account wagering -- two separate kind of operations, but itís
one major agreement, correct?
MR. WINKLER: If I misled you, Iím sorry. There actually would
be two agreements. One would be the master agreement for off-track wagering.
ASSEMBLYMAN ASSELTA: The master one.
MR. WINKLER: And one -- there would be a separate--
ASSEMBLYMAN ASSELTA: But you canít proceed forward
without the master.
MR. WINKLER: Correct, but there would be a separate agreement
for account wagering.
ASSEMBLYMAN ASSELTA: So I think my question is, can the
account wagering agreement be severed--
MR. WINKLER: Yes, it can, from the off-track wagering.
ASSEMBLYMAN ASSELTA: --from the master--
MR. WINKLER: Yes.
ASSEMBLYMAN ASSELTA: --to be facilitated quicker?
Because it seems like, Mr. Chairman, this is a quick, down and
dirty creation of some resources that weíre losing every day, when weíre not
being able to phone bet, correct?
MR. WINKLER: Yes, they can be separate agreements. The parties
tried to negotiate them together, because the parties were looking as a mass as
to what their economic interests would be, statewide, with both systems, but the
agreements can, and will, be separated so that we could process the--
ASSEMBLYMAN ASSELTA: And account wagering could be
processed much quicker and first, before OTB, so that we can begin to enjoy
MR. WINKLER: Yes, youíre absolutely right.
ASSEMBLYMAN ASSELTA: Thatís my only question.
MR. WINKLER: I kept it warm.
ASSEMBLYMAN VAN DREW: Next time, I think Leon has to get
up. How come you have to get up and down every time?
MR. ZIMMERMAN: I havenít spoken yet, thatís why.
ASSEMBLYMAN VAN DREW: I know.
I do know, and I want to extend that courtesy to him -- that
Assemblyman Arnone is here.
Assemblyman, did you want to speak now?
A S S E M B L Y M A N M I C H A E L J. A R N O N E: Well, I just--
ASSEMBLYMAN VAN DREW: Assemblyman, if you could come
forward, as well. Iím sorry.
For those that donít know, both Assemblyman Arnone and myself
ASSEMBLYMAN ARNONE: Thank you very much.
Iíd just like to touch, for just a brief moment, on the history of the
problem with horse racing. As many of you know, the horse racing industry is
in decline. Some might even say itís in a free fall. And my perception is that
thereís a saucering effect here, and it looks like itís coming back a little. But one
might also say that a dead body will bounce if you drop it off the Empire State
But let me say that horse racing, when it was legalized by the voters
of this state in 1947, was done so for property tax relief. And at that time,
believe it or not, the revenues from racing comprised 10 percent of the
appropriations in the State of New Jersey.
Whatís occurred with it -- itís not the fault of the casinos. I mean,
thereís been some fault that we can lay at the doorsteps of the racing industry
itself, like in New York, for an example. They resisted television, for an
example. They thought we were going to lose a few clients coming to the track.
Maybe we wouldnít sell as many hotdogs. They thought maybe it would open
it up for bookmaking. So they resisted that and opened the door for pro
basketball and other sports to take the scene. At that time, also, horses like
Native Dancer -- they were as popular to the public as maybe Michael Jordan
is today. So they were very popular at that time.
And, also, when OTB was questioned, in New York -- NYRA,
especially -- New York Race Association -- didnít want to get involved with
OTB. They made another mistake. So the city and the state got the OTB going
and made a lot of money with it -- or supposedly did. And weíre trying to sell,
probably, the New York section of the OTB, which is eight of them in the state
of New York -- for $400 million, I might add. NYRA wanted to buy that. They
refused -- turned it down.
But in any event, racing has been a product where it cost too much
to park your car, too much to get in, too much to get a hotdog, too much to get
a seat. And God forbid you went to the window and you said something to the
guy behind the window. You know where heíd tell you to go. Whereas, the
casinos treated people -- their clients -- in a much different manner. Theyíd give
them free drinks, theyíd give them free food at many times, comps, and treated
them very nicely. If you went to a table, theyíd wish you good luck. If you lost
money, theyíd tell you they felt bad that you lost your money, and what have
But racing, I think -- what theyíve done is, I think theyíve identified
their base. I think theyíve got a solid base out there. And they are, probably --
hopefully going to come back a little. But one of the concerns, I believe, that
the thoroughbred owners have -- which is a justifiable concern-- They recognize
that the decline of racing occurred for quite a few reasons. And I think the slide
probably started with the lottery approved, which was a very easy, convenient
form of gambling. And, of course, there is, what Iíd like to refer to as, adumbing
down of the gambling public. People do not understand complex gambling
methods. In fact, everything is, sort of, more of a rapid -- even the music is
faster and quicker. And the slot machine, of course, is a -- you can make quite
a few bets on a slot machine in a matter of a few hours.
Horse racing is eight races a day. To keep a horse in training can
range anywhere from $60 to $100 a day. And thatís not even factoring in,
folding into that, veterinariansí fees. So the cost of conducting horse racing is
very, very expensive.
So one of the concerns they have -- and Iím going to ask the -- your
OLS, nonpartisan representative to jump in if I stray from accuracy on this--
But the structural problem that exists in the very bill itself, that approved OTB
and account wagering in the state, states that anyone, in the year 2001, that
holds a license automatically becomes a participant, by fiat of this, of OTB and
account wagering for life.
So, in other words, thereís no guarantee there that live racing will
continue in the State of New Jersey. Monmouth Park can discontinue racing,
Freehold Raceway -- hopefully they donít -- but they could discontinue racing.
They still would be participants in the OTB and the account wagering system.
Down at Atlantic City Race Track, Levy, of course, folded his track up, and heís
still a participant in the OTB; but I donít think he had enough racing days to
participate in account wagering. And I believe that the Camden facility -- the
rights to the Camden facility were purchased by Pennwood, and they picked up
So I think that this provision, if itís altered, would give some
assurances to the thoroughbred industry that whomever conducts these facilities
would continue to have live racing in the State of New Jersey; which, of course,
one of their concerns is for the horse farms and the open spaces.
And thereís another little bit of a problem that, for some reason or
another, the tracks -- or the license holders -- were the ones that were vested with
the power to conduct OTB and account wagering. But yet, on the other hand --
back to the comment I made a moment before -- theyíve got the right, also, to
fold up the track and still keep those rights.
So I would say that-- I was an advocate of, actually, just bidding --
the State of New Jersey bidding out account wagering. I think thatís where the
dollar might be. I think the ability to conduct account wagering in the State of
New Jersey -- which, if you step back and look at it, is probably the highest per
capita income area in the country, if not probably in the world -- that large
stretch. That particular product could range anywhere from $300 million to
$400 million -- just the rights to sell account wagering.
But here again, Iíll leave that to smarter people than I. We can get
that kind of thing off the ground.
So thank you for your time. Thank you very much.
ASSEMBLYMAN VAN DREW: Thank you, Assemblyman.
My quest for power has come to a rapid conclusion. The Chairman
ASSEMBLYMAN GUEAR: Ladies and gentlemen, I apologize. I
had to step out. As the prime sponsor of another bill, Iím testifying in Law and
Public Safety, but Iím back. Iím sure Assemblyman Van Drew did a wonderful
Leon, youíre on, again, I understand.
MR. ZIMMERMAN: Well, thank you very much. I feel like Iíve
been commenting on everybody elseís things, and I wanted to-- There were a
couple of points that I did want to make. And Iíve made some of them, sort of,
throughout, so Iím going to try and pull it together.
The most important thing that I think the Legislature has to realize
is that weíre dealing with thousands and thousands of peoplesí livelihood here,
and hundreds of thousands of acres of open spaces. Weíre not dealing just with
the racetrack building where races are taking place, because the money thatís
generated from there is keeping all this other stuff going. And we talked a little
bit about the breeding end of things.
There are people who are involved in this industry because itís their
business. Theyíre independent, small business people. Or maybe their in it just
for a hobby, and they love it.
I donít know whether you realize -- Iím sure you know -- and if you
look on the State seal, you see the horseís head there, and you know that the
State animal is the horse. And I have been around a long time. That was a bill
that lobbied through in the í70s, and it was passed by this Legislature and made
the horse the State animal. And Iíd like to think the Legislature would want to
continue to do it justice and care about it in that sense.
I wonít go into all the numbers -- and Iím trying to summarize it --
but we have to realize that we have -- who needs to be protected here. And we
have to help these people and their farmland. And it goes beyond the racetrack,
as I said.
The other thing is, as was pointed out to you, of the Sports
Authorityís profit last year, $25 million came from harness racing alone -- Iím
sorry, $25 million came from racing, almost $21 million of which came from
harness racing. So weíre protecting a lot here.
The biggest problem we face is the competition from our
neighboring states. To our south, Delaware has already got the slot machines,
and theyíve already boosted their purses where theyíre among the most highly
competitive racing states in the nation. Pennsylvania, soon, will implement it.
There will be people in South Jersey, in your districts -- the gentlemen from
South Jersey -- who have access to Pennsylvania, just as easily as they do to
Atlantic City. And theyíre going to be affected by that. New York is going to
have it, and New York is going to have VLTs at its racetracks very soon.
Iíd like to ask Mike Izzo, who is with me-- Heís been studying this
Mike, what are we at now for New York and Pennsylvania?
Mike Izzo is the Executive Director. I wanted him to address,
really, the kind of numbers weíre talking about here.
M I C H A E L I Z Z O: Well, when youíre talking about numbers, weíre
talking about purse money or percentages. The Pennsylvania-- Thereís two bills
in Pennsylvania, now, that would give the horsemen 15 percent or 25 percent,
and the estimate of purse money is anywhere from $230,000 a night, to
$400,000, to $600,000 a night.
I know the percentages in New York. The horsemen gets 7.5
percent. I donít know what that means in dollars. I donít know what their
projections have been. But both are going to cause a significant increase in
purse money, which will definitely-- Horses will race in Pennsylvania and New
York. They wonít race at the Meadowlands.
MR. ZIMMERMAN: Incidentally, not only for harness racing --
our biggest competition comes from Ontario, Canada, where they have slot
machines at the racetracks. And their purses are comparable with the
Meadowlands. They are in that -- close to the $200,000 range. And thatís the
next best venue.
Is that right, Mr. Garland?
MR. GARLAND: Yes, sir.
MR. ZIMMERMAN: I got that one right.
Weíve been hearing talk lately about VLTs at the racetrack. Youíve
seen some articles about it. Some of your colleagues have introduced bills to do
it, and itís just, sort of, come from out of nowhere. We in the racing industry
have been talking about having slot machines and/or VLTs at our racetracks as
a way of providing new revenue to help us compete with the neighboring states.
All of a sudden some people in Trenton are talking about it.
But what we discovered was they were talking about it to help
balance the State budget. They didnít really care about the racetracks. And I
have to tell you, that if youíre going to put -- if the Legislatureís going to vote --
and I assume Assemblyman Van Drew is not -- but I assume if youíre going to
vote for VLTs at a racetrack, youíve got to give a fair share of it to the racing
industry, as well as to the people who manufacture and operate the machines,
because a VLT is, just about, a slot machine. I mean, theyíre called differently,
but the way theyíre manufactured today, theyíre identical, and they would have
the same competitive nature to them. And the State of New Jersey has to,
obviously, have its share. But it canít be just dominated by that.
I mean, I saw a bill -- the proposed piece of legislation for VLTs at
the racetrack that talked about 5 percent to the horse industry. Well, thatís not
enough. Weíre going to have people betting on machines in our racetrack
building, in our home, and not betting on the races. So weíre going to lose
money. Weíre not going to get, even, a fair percentage of it. So I would
emphasize that if, in fact, VLTs come before you as a possibility, that youíve
got to consider compensating the racing industry fairly in that regard.
I heard you ask before about what other things can you do. In
2002, as you know -- and Assemblyman Asselta told me, the last time I sat here
-- "Didnít we appropriate money for you?" And -- $18 million was given in lieu
of the fact that we didnít have any other source of revenue. And that allowed
us to keep our purses competitive for one year. And then a second bill was
implemented, and it was cut to $6 million, I believe.
In any event, Assemblyman Asselta said to me, "Well, how about
we donít worry about the VLTs? Weíll just appropriate the money to you,
again." Well, in lieu of your budgetary problems, I donít think Iím going to --
the racing industryís going to see revenue like that, although thatís fine, too. I
mean, if you donít want to give us VLTs at our racetrack, then appropriate
another $18 million every year. Iím not being -- Iím being facetious, but Iím
just trying to point out that thatís one of the alternatives.
Now, there was another alternative that floated out there a couple
of years ago, and that was to establish a slot machine center in Atlantic City,
owned and operated by the casinos, with revenue shared with the racing industry
in the old convention hall, which is being remodeled, and put it in there. Thatís
something that never got enough serious attention, to my way of thinking,
because I think that would be a way of solving the problem without having the
competitive location. It would still be Atlantic City casinos operating slot
machines, and dedicating a fair share of the revenue to the racing industry.
Remember, I said to you, in Illinois they put riverboats in, and they
gave the racing industry money. Why did they do that? Because they didnít
want to hurt the racing industry, so they gave them some of the money. So
maybe thatís something that we ought to reexamine -- someone ought to look
All I can tell you is, the vise is getting tighter and tighter every day.
And weíre lucky, in a way, that harness racing has done so well. But itís largely
because the Meadowlands, as Mr. Garland pointed out to you, is the number
one, pari-mutuel wagering facility in North America. More money is wagered
through that facility than anywhere else, and that has helped us.
And I have to, again, caution you. If Pennsylvania racetracks, right
across the river, 15 minutes from here, are going to have slot machines; and New
York racetracks, right across the river, are going to have VLTs; and the bulk of
the business in Atlantic City is machines, how long will it be before the Atlantic
City casino industry is in trouble? Maybe it would be wise for them to get a
new partner, and go to the racetracks, and stop those people from midtown
Manhattan, who can then go across the river to the Meadowlands and use those
machines. And the casino industry would share in that money, obviously. Or
Philadelphia could come across the river here. And I just think that it makes a
lot of sense to look at it.
The life of New Jerseyís very valuable equine industry is on the line,
it really is. Weíve got to do something soon.
ASSEMBLYMAN GUEAR: Thank you.
Any other questions from Committee members?
ASSEMBLYMAN ASSELTA: Iíll do the appropriation bill.
(laughter) It will solve all our problems, right?
ASSEMBLYMAN GUEAR: Again.
MR. ZIMMERMAN: I donít know if youíre serious or not, but I
would certainly support it. (laughter)
ASSEMBLYMAN VAN DREW: Thatís a real surprise.
ASSEMBLYMAN GUEAR: Thank you, gentlemen.
MR. ZIMMERMAN: Thank you.
ASSEMBLYMAN GUEAR: Next, Karyn Malinowski, from the
Equine Science Center, Rutgers University.
K A R Y N M A L I N O W S K I, Ph.D.: Thank you, Mr. Chair.
Iíve asked my colleague, Dr. Ken McKeever, to join me up here this
ASSEMBLYMAN VAN DREW: Mr. Chair, if I have a point of
personal privilege for a second.
ASSEMBLYMAN GUEAR: Go ahead, Assemblyman.
ASSEMBLYMAN VAN DREW: She knew this was going to
happen. I went to college with Karyn Malinowski.
Karyn, I wonít tell any of the stories.
DR. MALINOWSKI: Please donít, sir.
ASSEMBLYMAN VAN DREW: It was a long, long time ago. But
itís really good to see you here and how well youíre doing at Rutgers.
DR. MALINOWSKI: Thank you, Assemblyman Van Drew.
ASSEMBLYMAN GUEAR: Ms. Malinowski, I would advise that
itís just about ten of four. I realize that youíve waited for a couple hours to
come up. But I would just request that you give us the thumbnail on your
testimony, if at all possible.
DR. MALINOWSKI: Weíll make this very quick, Assemblyman.
I have provided a written copy of testimony for you.
Whatís very interesting, in listening to the almost two hours of
testimony so far -- and to, kind of, give you some answers, other than VLTs, of
how we can bring the racing fans back is -- not one time was our product
mentioned, and that is the horse.
Iíve been asked to come here to talk to you about the future of the
New Jersey horse industry and, specifically in view of today, the racing industry.
Some of our colleagues have shared some of the numbers with you.
We know that equine-related assets in New Jersey amount to $3.2 billion. The
industry employs some 6,000 full-time men and women, and generates almost
$700 million annually, and this is excluding, of course, pari-mutuel wagering.
Horses are the third-largest agricultural commodity in the State of
New Jersey and the number one livestock commodity. We account for 49,000
animals, on 7,100 facilities, in every county, statewide.
Beside the economic importance of the industry, the 7,100 horse
farms maintain open space of 81,000 acres in the state, and there are several --
Assemblyman Van Drew -- horse farms such as Walnridge, in Monmouth
County, that have been in farmland preservation for a long time.
This, in turn, provides increased quality of life to New Jersey
citizens. Horse operations tend to be more viable than other types of
agricultural businesses, making the horse industry critical to the growth and
land-use strategy, which is on all of our radar screens in the state.
Barbara has mentioned that horse racing in New Jersey, as we have
heard today, is fragile, yet both thoroughbred and standardbred racing have a
significant impact on State revenues, wages paid to employees, and quality of
life for New Jerseyans through open space maintenance.
The racing industry deserves the Stateís support in a number of
areas, not the least of which is an extremely strong and powerful Equine Science
Center. Our Center, at Rutgers University, is recognized internationally for its
research, teaching, and outreach. It is a unit of Cook College and the New
Jersey Agricultural Experiment Station. It was created to identify problems, such
as whatís being discussed today, in the horse industry; to find solutions through
science-based inquiry; and to offer those solutions to the industry and horse
owners -- and to influence public policy to ensure the viability of the horse
industry. Our slogan is "Better horse care through research and education."
The Equine Science Center is critical in the economic development,
integrity, maintenance -- if you talk about bringing fans back to horse racing,
when the integrity goes out the window, thatís when we lose our fans -- the
quality standards, and sustainability of the racing industry in New Jersey.
Numerous Equine Science Center programs support thoroughbred
and standardbred racing in our state. For instance, some of you may have heard
recently of the two products that weíre presently drug testing for -- and again,
to maintain integrity in racing -- one called Epogen, or Epo, and growth
hormone, both tests which were developed at Rutgers, The State University. Dr.
McKeever and colleagues perform exercise physiology studies to safely maximize
equine performance, again enhancing the quality of the product that weíre trying
We also do a lot of work in detection of reproductive problems,
which result in foal loss in mares; recommendations in pasture and manure
management; and workforce preparation for future employees in this wonderful
industry. We also have helped equine business develop through marketing
assistant and financial management planning.
For the past 20 years, the essential, behind-the-scenes partner
regarding horse industry issues of the New Jersey Department of Agriculture and
the New Jersey Racing Commission has been the people at the Equine Science
Center. We have provided unbiased, research-based solutions to challenges
facing the New Jersey equine industry. The ESC has been described as the
unbiased docking station for all aspects of New Jersey racing and other equinerelated
interests including -- and made public today -- humane standards for
New Jersey is the horse state, where the horse is recognized as the
official State animal, and where more horses per square mile reside than any
other state in the United States. Rutgers is looking at this in a very visionary
manner, and our strategy of responding is this Equine Science Center. However,
we believe the State of New Jersey has neglected the equine industry and now
is the time to correct that oversight.
For example, why is there no economic development authority for
the racing industry? Economic development processes have been developed for
casinos, tourism, for agriculture and food industries, for health care, but not for
equine. That needs to change. Other states are devoting substantial portions
of racing revenues to the support of research and outreach for their equine
industries. This is true in California, New York, and Michigan, to name a few.
We believe that a racing industry recovery initiative is appropriate, at this time,
for the State to launch at the Equine Science Center.
In New Jersey -- in addition to directing racing-generated revenues
to regulation of the industry and breeding incentives -- it is necessary to begin
utilizing the industryís own moneys to such activities as proprietary research, to
enhance the economic competitiveness of the New Jersey racing industry, in
relation to other states and to other leisure pursuits. It also is essential to direct
outreach programs targeted to racehorse owners and to racetracks, again to
enhance the quality of the product that makes up our industry. The Rutgers
University Equine Science Center is the logical and ideal entity to perform these
important economic development and outreach activities. These are part of our
mission, that are consistent with the activities in which we already are engaged.
We propose that in order to accomplish these essential activities,
and bearing in mind that New Jersey must expand revenue opportunities for the
industry, New Jersey can devote a percentage of these expanded revenues to
support the necessary work of the Equine Science Center.
It is our vision to catalyze the investment in the infrastructure and
the future of the racing industry -- and the equine industry in its entirety -- in
New Jersey, and to enhance the quality of the product that weíre trying to sell.
Thank you, Mr. Chairman, Mr. Vice Chairman, for your attention.
ASSEMBLYMAN GUEAR: Thank you very much. That was brief,
but quite informative.
Any questions from any Committee members?
ASSEMBLYMAN ASSELTA: Doctor, it sounds like your testimony
should be directed to the Appropriations or the Budget Committee, not really
the Tourism and Gaming Committee, number one.
Number two, your mission, now, is to identify the problem and
create solutions for that problem, currently. And youíre saying, without an
economic development component, the solutions you have come to know at this
point canít be implemented.
DR. MALINOWSKI: Youíre correct. The mission of the Center,
and everything that we do, is to ensure the viability and vitality of the New
Jersey horse industry. We worked tirelessly -- and unbiasedly -- to ensure that
horses remain very viable in the State of New Jersey.
We feel that, besides the hardcore physiology and research, the
Equine Science Center can provide strategies. We have marketing people. Soji
Adelaja, our Dean, is one of the top agricultural economists in the country. And
we would be committed to looking at the economic development component of
the horse racing industry. But not only the racing industry. I know thatís the
primary focus of todayís discussion. But we really need to take a serious look
at the horse industry in New Jersey in general, both recreation -- socioeconomic
component, as well as the open space component.
ASSEMBLYMAN ASSELTA: Thank you.
DR. MALINOWSKI: Youíre welcome.
ASSEMBLYMAN GUEAR: How long has the Center been
DR. MALINOWSKI: Mr. Chairman, the Center was passed and
formed by the Board of Governors at Rutgers University in February of 2001.
Some of us have been there almost as long as Leon has. (laughter)
Leon, are you still in the room?
ASSEMBLYMAN VAN DREW: He never left.
DR. MALINOWSKI: Weíve been working for the industry
approximately 25 years, but itís only been the last two that the Center --
bringing in scientists from all different venues besides just horse interests --
economic people and marketing people -- have come together in one voice.
ASSEMBLYMAN GUEAR: Okay. Thank you.
Assemblyman Van Drew, you had a question.
ASSEMBLYMAN VAN DREW: I just wanted to commend Dr.
Malinowski. Theyíre doing wonderful work there, and really are on the cutting
edge in the country.
I think itís an interesting avenue to pursue, actually. Weíre always
at odds here. Weíre always arguing -- and weíre not, down in South Jersey,
going to do anything thatís going to hurt one of the few industries that we have
that make our communities thrive. And at the same time, I think it would be
fruitful to pursue what avenues are there for the horse industry, in order to save
it. If the only avenue to save it is to hurt the casino industry, theyíre going to
have a difficult time.
So I think we really do need to look at some of the issues that sheís
brought up. I think this was valuable.
ASSEMBLYMAN GUEAR: Okay.
Any other questions?
ASSEMBLYMAN ASSELTA: We could sure utilize that
management study. We have a lot of use for that.
DR. MALINOWSKI: Some ideas.
ASSEMBLYMAN VAN DREW: That wasnít in reference to me,
was it? (laughter)
DR. MALINOWSKI: Iím taking you seriously, Assemblyman.
ASSEMBLYMAN VAN DREW: No, in the Legislature, we could
use some hot air studies, too.
ASSEMBLYMAN GUEAR: Itís getting rather deep.
DR. MALINOWSKI: Thank you, folks.
ASSEMBLYMAN GUEAR: Okay.
Gregory Boehmer. Am I pronouncing it correctly?
G R E G O R Y B O E H M E R: Thatís correct.
ASSEMBLYMAN GUEAR: Step right up, sir, and identify yourself,
MR. BOEHMER: Iím Greg Boehmer, Executive Director of the
New Jersey Sires Stakes, and also head of the Equine Division for the
Department of Agriculture.
I will try to follow my predecessor, Dr. Malinowski, and be very
brief for you, as I know we are short on time.
Not only is the New Jersey racing industry at a crossroads, but this
is a crossroads for the entire agricultural industry. The domino effect, which
could happen, could have just a disastrous impact on all of agriculture in the
State of New Jersey.
The domino effect could go something like this: The attraction of
higher purses in neighboring states, most likely, would prompt New Jersey based
owners and trainers to take their horses elsewhere. The State Stakes Program,
which I run, along with thoroughbred stakes -- neighboring states will offer
richer purses. Currently, as Bruce Garland mentioned, New Jersey standardbred
purses -- number one in North America. That could soon change. And the
Meadowlands would be hard-pressed to, once again, keep raising the purses to
keep up with states that have additional sources of revenue.
Breeding farms -- already seeing a problem with breeding farms
keeping stallions, top stallions, here in New Jersey. The thoroughbreds have
taken a beating, as far as their options of who they had to breed to. The
standardbreds really havenít lost anybody. But at the same time, to keep
interest in the breeding industry, itís the latest and the greatest: whoís hot, whoís
not. And right now, Jersey got a boost from a couple edition of trotting
stallions. Pacing stallions have been stagnant, and that has been very, very
detrimental to the breeding industry of pacing mares in New Jersey, and that is
Obviously, some of the things that will happen cannot be undone.
The farms that eventually do get sold that are not preserved, and theyíre
developed -- thereís no getting those back. And, obviously, we donít want to see
Trainers-- There are some fans, customers, that follow particular
trainers, that know that these trainers put out quality horses every time they
race. And thatís -- whether or not the horse shows a whole heck of a lot on
paper, these people will bet the trainers. And if Jersey loses these trainers to
competitive jurisdictions, such as the Ontario circuit, which is offering rich
purses; Pennsylvania and New York -- Maryland is not too far behind them.
Obviously, we need to keep our trainers, our drivers, and our jockeys here,
because these are the people that our fans go to wager on.
Loss in handle will definitely compromise the bottom line of all
these racetracks and, once again, will shrink purses. The need for backstretch
employees -- such as caretakers, exercise riders -- will decline. Racetrack
employees -- need for them decline. New Jersey hay farmers suffer. Grain
producers suffer. Blacksmiths, equine dentists, veterinarians -- also going to
move elsewhere to maximize their incomes. So, obviously, the domino effect
that the continued downward spiraling of this industry could have, obviously,
is very, very big.
Iím not going to hit, too much, the numbers. Dr. Malinowski did
a fine job of that. One thing I will also commend Dr. Malinowski on -- their
program that we have. And the Department of Agriculture strongly supports
everything going on at the Equine Science Center.
If the racing industry is at fault for anything in particular -- we
missed out on a generation. The 20- and 30-somethings, really, did not have
the education needed to continue the interest in racing. And racing was at its
peak at the time these 20- and 30-somethings were youngsters. The majesty of
the horse, and all that, have, kind of, passed away, to Xbox and game station,
too. And, to me, thatís a tragedy. And Horses 2003, the conference just held
at the Cook College at Rutgers -- amazing to see the young people, and not all
of them involved in the harness racing industry -- rather, in the racing industry --
many of them coming to see what this is all about. And I hope Dr.
Malinowskiís able to continue to get the young people back into the sport of
Money is not the only answer, and I know money solves a lot of
problems, but it doesnít solve all the problems. Strategies have to be in place
to move the racing industry forward. Thirty million dollars canít come from the
casinos in Atlantic City, $18 million canít come from the State Legislature, and
just money go to these purses. And the Department of Agriculture -- Secretary
Kuperus feels very strongly that strategies need to be in place to invest in the
future of racing.
New breeder programs, breeder award programs for the
thoroughbred-- Projects are already being framed, for the future, to help the
racing industry move forward -- and not just with the idea of taking money and
just throwing it back into the purses, but really trying to expand everything that
has gone on thatís made New Jersey racing so wonderful. Also, promoting the
industry, providing better education efforts, and also assisting the breeding farms
and all the major racing operations in their labor issues, as well.
ASSEMBLYMAN GUEAR: Thank you, sir.
Any questions or comments from Committee members? (no
The later it gets, the questions diminish. (laughter)
All right. Thank you, sir.
MR. BOEHMER: Thank you, Mr. Chairman.
ASSEMBLYMAN GUEAR: I appreciate your testimony.
Do I hear a motion to adjourn?
ASSEMBLYMAN VAN DREW: Motion.
ASSEMBLYMAN GUEAR: Second.