Mid-Atlantic Musings (After Question 1 Defeat, Where Does NJ Go From Here?)- by John Piassek- Wednesday, November 16, 2016

MID-ATLANTIC MUSINGS

by John Piassek

AFTER QUESTION 1 DEFEAT, WHAT’S THE FUTURE OF NJ RACING?

Although it obviously was not the most important vote to happen last Tuesday, a big vote was on the ballot in New Jersey. The question posed to voters: should the state authorize the building of two casinos outside of Atlantic City?

At the moment, casinos in New Jersey are illegal outside of Atlantic City, while every state surrounding New Jersey has multiple casinos all over their states. This bill would have changed that, and allowed other casinos, in an attempt to siphon away casino dollars that have been going to other states.

The bill was opposed by Atlantic City interests, which were seeking to protect their floundering city, but also by one party that one would have thought would benefit from such legislature: Monmouth Park. Why? Primarily, it was because the bill specified that no casino could be built within 72 miles of Atlantic City—an unusual and obtuse distance established solely to keep Monmouth out of the running for a casino on the property. The amount of money allotted to horse racing from casino revenue was, compared to what tracks in other states get, scrap metal: around 2% of casino revenue.

Opponents also took issue with the vagueness of the proposal. The question failed to specify where the casinos would be located and what would be done with most of the revenue, leading to some voters feeling as if they were being deceived.

The Meadowlands, which would have been eligible for a casino, enthusiastically encouraged their customers to vote “YES” on question 1, while Monmouth told their customers to do the opposite. The day before it went to a vote, Monmouth switched their stance, after apparently reaching an agreement with the Meadowlands that would have divided up to $30 million in revenue from an on-site Meadowlands casino between the Meadowlands and Monmouth.

Question 1 lost at the polls. But to say the measure “lost” would be an understatement. A whopping 78% of voters–more than 2.2 million of them–voted “no” on question 1. Just 661,000 voted to give casinos to New Jersey.

The result was met with a positive reaction from many in the New Jersey racing industry, with many saying that the lack of funds given to racing in the state, and the confusion over the language of the amendment, meant that the bill would have done little for the industry. The hope is that the question will be back on the ballot in a few years, with more favorable conditions for horse racing, and more specific wording on where the casinos will be and what will be done with the revenue.

Even with a better-written bill, a defeat of that magnitude may be difficult to turn around. As such, the question facing New Jersey racing is: between the defeat of sports betting earlier in the year, and the defeat of question 1, how can they make their product competitive without outside sources of revenue?

Dennis Drazin, leader of the team that operates Monmouth Park (and owner of one-time Triple Crown contender Sunny Ridge), is working on ways to bring casinos to the racetracks, including a bill that would legalize VLTs (video lottery terminals) at the tracks without getting voter approval first.

Online casino gambling is already legal in New Jersey, something that Drazin says could be used to Monmouth’s advantage. An area on-track in which customers could play casino games on computer screens could provide revenue not only to Monmouth, but to the floundering Atlantic City casino industry.

All the ideas have noble intentions. Clearly, something dramatic has to be done in order to help Monmouth stay afloat until outside help arrives. It was a trying season for the Oceanport oval, with overall handle down by 26%, and handle-per-race down by around 15%. There were 4,803 entries over the course of the season, down sharply from the 6,102 horses who passed the box in 2015. Haskell Day was marred by rain; both attendance and handle were off by around 50% compared to last year.

As I noted in a column earlier in the year, it is difficult to blame all of Monmouth’s issues on management. It’s difficult to compete with other tracks when you can’t offer as much money as them, due to factors out of there control. However, in all likelihood, there will be no outside help in 2017. As such, it is time for management there to dig deep and try to find ways to make their product sustainable, and attractive to horseplayers across the country.

How? Well, a later post on Friday afternoons would not hurt. If you started the races at, say, 4:00 EDT, you could run nine races and have everything wrapped up by 8:00. You would attract more west coast handle. With good on-track promotions and smart marketing, attendance on Fridays could jump up significantly (“get an early start to your weekend on the Shore’s Greatest Stretch”).

Earlier in the year, Monmouth launched a daily fantasy sports website , but it was recently discontinued due to a lack of fanfare. Sports fans enjoy DFS games, and racing fans have shown interest in contests on sites like DerbyWars. If there were contests that combined Monmouth Park racing with team sports, and promoted them heavily on and off-track, that could have brought in some extra money.

At the Monmouth-at-Meadowlands all-turf meet, an experiment was conducted in which the takeout on all bets was reduced to 15%. Handle per race card declined by around 13%, but that was primarily because of smaller fields than last year’s meet, and an irregular racing schedule. It wouldn’t hurt to take another shot at lower takeout for the summer meet, at least for some wagers.

There’s plenty of other ideas out there that can be implemented. The point is: casino money won’t be coming to Monmouth next year, and it may be difficult to fashion a referendum that benefits all involved parties in New Jersey in the coming years. It is time for the track to try to make themselves as self-sustaining as they can, in order to, at the very least, survive in the next few years. A strong vision and a commitment to improvement of the racing product would be key to helping the track go forward. While all the answers will not be found in a quick column like this one, they can be out there.

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