Senate Approves First Phase Of Gaming Bills

Measures Intended to Stabilize, Reinvigorate Ailing Casinos and Horse Tracks

TRENTON – A package of bills sponsored by Senate Democrats to help breathe new life into New Jersey’s ailing casinos and horse race tracks was approved by the full Senate today. The bills, the result of Statewide hearings held on issues pertaining to the gaming and wagering economic sectors earlier this year, are intended to bolster economic activity and maintain competitiveness for our gaming industries, which are facing more and more competition from across State lines.

“Unless we take the necessary steps to bring our casinos and horse tracks into profitability and self-sufficiency, we’re going to lose these economic engines and all the benefits they bring to our State,” said Senator Jim Whelan, D-Atlantic, the co-chair of the Legislative Gaming Summit and a sponsor on many of the bills. “This would be a devastating blow to New Jersey’s economic future, and it’s something we cannot allow to happen. Through the measures approved today, and additional bills which I expect to move shortly, we will be able to give our gaming and wagering industries a fighting chance.”

“The Senate today has passed a bipartisan, comprehensive package of bills intended to help our casinos and racetracks survive in today’s competitive market,” said Senate President Stephen M. Sweeney, D-Gloucester, Cumberland and Salem, and a member of the Legislative Gaming Summit which recommended statutory action. “This isn’t about one region of the State over another, but about a Statewide, forward-thinking approach to stabilizing and enhancing our economy. It’s about giving casinos and racetracks the tools they need to stay competitive and remain economically productive for many years to come.”

The first bill in the package, S-490, sponsored by Senator Raymond J. Lesniak, would authorize Atlantic City casinos to operate intrastate and international Internet wagering operations. The bill would provide that all games, including poker, that are played at a casino, as well as variations or composites, may be offered through Internet wagering, and the bill would establish proper safeguards and regulation to ensure fairness in Internet wagering. Internet-based games would be available to New Jersey residents and international bettors, but would be prohibited for bettors across state lines, to conform to federal interstate Internet gambling prohibitions. The bill was approved by the Senate by a vote of 29-5, and now heads to the Assembly for consideration.

“This bill would generate a minimum of $35 million in tax revenue to help build a bridge to self-sufficiency for our State’s ailing horse tracks,” said Senator Lesniak, D-Union, and a member of the Legislative Gaming Summit. “It would generate millions of dollars in private revenue and would give casinos a new product to capture gaming dollars from tech-savvy gamblers. Right now, Internet wagering is taking place, and the funds are going to off-shore operators. It’s time that we give casinos the authority and the tools to keep these funds in the Garden State.”

The second bill, S-829, sponsored by Senator Richard J. Codey, would authorize the New Jersey Racing Commission to issue a license to the Sports and Exposition Authority to establish an exchange wagering system in New Jersey. Under the proposed system, which would allow New Jersey residents who are at least 18 years of age to open an account, bettors would be able to set up exchange wagering accounts, and two or more bettors would be able to place directly opposing wagers on the outcome of a horse race or races. Exchange wagering differs from the existing pari-mutuel betting taking place at horse tracks in the State in that bettors are matched directly with opposing bettors, as opposed to betting against odds that are set by the licensed race track operator. Under the bill, bets could be paired against opposing wagers in New Jersey or any other state which has a legal exchange wagering system. Exchange wagering could also be set up so that bettors can place their bets in person at the racetrack, by direct telephone call, or by communication through some other electronic medium, including over the Internet. The bill was approved by a vote of 34-1, and now heads to the Assembly.

“Exchange wagering has proven popular among bettors in Europe, and could help reinvigorate the horse-racing industry here in New Jersey,” said Senator Codey, D-Essex. “At the end of the day, exchange wagering is just part of the solution to making horse racing in New Jersey self-sufficient. We have to provide the industry the tools and support needed to maintain the thousands of jobs, nearly $1 billion in revenue, and thousands of acres of open space associated with horse racing in New Jersey.”

The third bill, S-1866, sponsored by Senator Whelan, would authorize the State Casino Control Commission to create a pilot program to offer two new classifications for casino licensure. In addition to the traditional 500-plus room capacity, minimum 60,000 square foot casinos that the Commission currently licenses, the Commission would have the option of licensing a small-scale casino project, which would have not more than 24,000 feet of casino space and not less than 200 qualified sleeping units, and a staged casino facility project, which would begin with not more than 34,000 square feet of casino space and not less than 200 sleeping units, and would be required to build up to the 500-room requirement within five years of licensure. Under the bill, the Casino Control Commission would have the authority to license one small-scale project and one staged facility project in order to see if these sorts of casino developments would thrive in Atlantic City under current market conditions. The bill was approved by a vote of 32-0, and now heads to the Governor to be signed into law.

“Through this legislation, we’ll be inviting new investment to revitalize blighted areas in Atlantic City,” said Senator Whelan. “When we rolled this bill out earlier this year, we were met with enthusiastic support from potential developers, and Hard Rock is ready to put shovels into the ground as soon as this bill passes and the ink on their casino license dries. Unless we diversify the gaming product in Atlantic City – and that means being open to boutique casinos – the market will stagnate and decay as competition builds just beyond our borders.”

The fourth bill in the package, S-1980, sponsored by Senator Paul A. Sarlo, would make various changes to the State’s “Off-Track and Account Wagering Act,” to ensure that off-track wagering (OTW) facilities are being built in New Jersey. Under current law, the New Jersey Sports and Exposition Authority and private racetracks are permitted to develop 15 (OTW) parlors throughout the State. Under Senator Sarlo’s bill, the 15 current permit holders would have to show progress by January 1 2012, or those permits would revert to the horsemen organizations, and if the horsemen organizations cannot show progress, the permits would go to the open market, to allow any private investor to bid on the development rights for those facilities. The bill was approved by a vote of 32-1, and now heads to the Assembly for consideration.

“Every year since they’ve been in operation, OTW parlors have been a proven economic success, posting profits while other facilities are mired in red ink,” said Senator Sarlo, D-Bergen, Essex and Passaic, and a member of the Legislative Gaming Summit. “This bill would create benchmarks for OTW development, and would create a mechanism to break the logjam of development when the licensees aren’t moving quickly enough. It would allow communities without the necessary open space to support a live horse racing track to capitalize on the economic benefits of racing in their borders.”

The fifth bill, S-2229, sponsored by Senator Codey, would allow racetracks to combine all wagers placed on the results of one or more runnings or harness horse races into a single pari-mutuel pool. By creating larger pari-mutuel pools, racetracks can handle a greater variety of wagers and reduce the adverse effect of large pay-outs to the racetrack’s bottom line. The bill was approved by a vote of 34-0, and now heads to the Assembly.

“When someone loses money at the racetrack, they’ve hopefully bet responsibly, and not put their entire life savings on the line,” said Senator Codey. “But when a racetrack loses big, it can be a crippling blow to the track’s bottom line, destabilizing the entire operation. This bill gives racetracks the ability to combine wagers into a larger pool to insulate themselves from a big loss.”

The sixth bill in the package, S-2390, sponsored by Senators Sarlo and Whelan, would lower the minimum requirement for the number of standardbred horse racing dates scheduled at the Meadowlands Racetrack and Freehold Raceway to 100 dates per season at each track. The move, following the successful adoption of a reduced schedule at Monmouth Park earlier this year, would ensure larger purses and more prestigious races at the racetrack each year. The bill was approved by the Senate by a vote of 34-0, and now heads to the Assembly for approval.

“This year, Monmouth Park experimented with a truncated schedule and it was a massive success,” said Senator Sarlo. “We want to be able to give the Meadowlands the same opportunity to increase purse pay-outs and draw the larger, more exciting races that a shortened schedule allows.”

The final bill, S-2394, sponsored by Senator Sarlo, would dedicate an amount equal to the sales and use taxes associated with horse racing, breeding, training, raising or boarding to programs designed to improve and promote thoroughbred and standardbred horse breeding in New Jersey. The bill would require the Director of the Division of Taxation to annually deposit an amount equal to the sales and use tax revenue collected in association with horse racing and breeding into a new fund within the Department of Law and Public Safety – the “New Jersey Standardbred and Thoroughbred Racehorse Incentive Fund” – which will be maintained by the New Jersey Racing Commission. The Director of Taxation would be required to consult with the Racing Commission to identify and define the amount of tax revenue associated with horse racing and breeding. The bill was approved by a vote of 31-3, and now heads to the Assembly for consideration.

“Not only is the horse-racing side of the business hurting, but horse breeding in New Jersey is in need of a major investment,” said Senator Sarlo. “This bill makes sure that sales and use taxes associated with horse breeding, racing, and boarding are reinvested in programs to offer incentives to breeders.”

“We still have more work to do, but these seven bills represent a great start in stabilizing our gaming economy,” said Senator Whelan. “We cannot allow a system in which there are winners and losers based on geography and parochial concerns. The package of bills authored by Senate Democrats represents a fair approach to bolstering our casinos and racetracks and ensuring a healthy, robust, Statewide economy for many years to come. I look forward to moving these and the rest of our gaming and wagering package to put New Jersey’s casino and horse-racing industries on the fast-track to recovery.”

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