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Editor's Note: New Jersey's horse racing industry has been hammered for years by declining attendance and shrinking purses. It sees slot machines at racetracks as its best chance to survive.

Atlantic City's casino industry has been paying millions in "subsidies'' to the state's tracks for years to forestall the arrival of racetrack slots.

State government is trying to resolve this knotty conflict involving two powerful and influential gaming industries. This month, a state commission began meeting to study the problem.

Press special reports writer John Froonjian has been looking into the issue for months. He's examined studies and reports and analyzed the two gaming industries and their seemingly irreconcilable concerns, and he's spent time talking to people with a stake in the outcome.

Through his research, two things became clear:

- Attempts by the state to reverse the racing industry's falling fortunes have failed miserably.

- As the commission begins looking at options, the stakes have been raised. This time, the consequences of failure could reach beyond racetracks and gaming halls.

An impending battle to allow slot machines at state racetracks could end Atlantic City's 33-year monopoly on casino-style gaming in New Jersey.

Gambling revenue at the state's racetracks has dropped by a half-billion dollars since 2000 as the number of racetrack visitors dwindles each year. The track owners and racehorse breeders want slot machines to generate purses, the money paid to winning horse owners.

The horse industry and some lawmakers blame the casinos for racing's problems. Under pressure, the casino industry began subsidizing purses in 2004 in two deals to keep slots out of New Jersey's racetracks. The casinos are obligated for $176 million in cash and investment credits over seven years. The casinos are paying $30 million per year even as they lay off thousands of workers.

Casino officials say subsidies will end with the contract in 2011. They oppose racetrack slots as potentially devastating in-state competition.

The battle over expanded gaming at tracks will be played out as a 15-member commission named by Gov. Jon S. Corzine studies how to save racing.

Analysis by The Press of Atlantic City shows that while bigger purses may help horse owners, they do not attract more people to the tracks to bet on horses.

- Track attendance and betting revenue have continued to drop despite casino subsidies. The subsidies go to the two state-owned tracks - Meadowlands Racetrack and Mon-mouth Park - and previously went to Freehold Raceway, which took $8 million in the first four years.

- Analyses of winners on randomly selected Meadowlands racing days show that two-thirds of the top purse money is won by out-of-state horse owners. A casino analysis shared with The Press shows that even in recent races in which New Jersey horses were given an entry preference, state-bred horses took the top winnings less than half the time.

- Betting on horses has continued to decline in states where racetracks already have slot machines, according to reports.

State residents and officials may not have cared that casinos were subsidizing racetracks; the money did not come out of taxpayers' pockets. However, the subsidies effectively divert millions of dollars from programs that benefit senior citizens and handicapped residents to finance winnings for horse owners.

In return for the subsidies, the state granted casinos a tax break on credits provided on slot machines to let gamblers play for free. The break could save casinos $15 million to $20 million per year on money paid into the state fund for seniors and handicapped residents.

Casino supporters, such as state Sen. Jim Whelan, D-Atlantic, question why one industry should have to subsidize another.

"Boxing used to be hugely popular," said Whelan, a former Atlantic City mayor. "Are you going to go to the (NFL) and say, 'You're more popular, so you're expected to subsidize boxing'?"

Racing advocates point to a Rutgers University study that said the horse industry generates $1.1 billion per year and has created 13,000 direct and indirect jobs.

Records show that the casinos provide many times that in economic benefits.

Horse farmers and breeders threaten to move to states where they can earn more money if racetrack purses do not remain high. Their farms could be sold to developers, with the state losing open space.

Anthony Perretti, of Perretti Farms in Monmouth County, said farmland-preservation programs will not work unless there's business to support horse farmers. Slot machine revenue would keep the horse industry healthy, he said.

Advocates of both the casino and horse industries point to another revenue source that has not been developed.

In 2001, the state authorized New Jersey racetracks, including Atlantic City Race Course, to run off-track wagering centers. The facilities, including businesses in Toms River and Vineland, are economic bright spots for horse racing. They produced more revenue last year than was bet in person at the state's tracks.

But only three have opened so far. Critics charge the racetracks would rather take casino subsidies - or casino-style gambling - than help themselves.

The governor's study commission, with members from both the horse and casino industries, must weigh all of these arguments. The panel's report, due in July 2010, could dramatically change the nature of gaming in Atlantic City and throughout the Garden State.

E-mail John Froonjian:

JFroonjian@pressofac.com

13 comments:

• PennsylvaniaSucks (121) posts 12:06 am

  Who cares about horse racing? Nobody. But if the state wants to use horse racing as an excuse to establish casinos throughout the state, go for it! Keep the money in Jersey, not Pennsylvania.

• American_Gaming_Guru (310) posts 9:15 pm

  Agreed. Well written article!

• pawins (7) posts 7:28 pm

  The ironic part about AC casinos thumbing their nose at the horse racing industry is they are about to join them in their plight. A failing business model looking for help to prop it up. AC is no different. You'll be doing the same thing to "save the casino industry" and all the jobs. Not gonna happen. Maybe you'll be able to find the someone else to leach on to also.

• Salvatore (56) posts 7:24 pm

  Must be a lot of old timers here. People between ages of 20 - 45 in the tri-state area only head to AC. We need more than just gambling,and AC offers a good time and the beach. If you want to know the future, see where the young crowd hangs out.

• PennsylvaniaSucks (121) posts 12:21 pm

  Ha HA!! Enjoy your glory while it lasts Bethlehem... when Jersey opens casinos at the Meadowlands you're going back to the dumpy city that Billy Joey sung about! That 50% business the Sands Bethlehem casino heads were counting on from NYC and North Jersey will have an even CLOSER place to gamble.. just miles away from home! hahaha

• layoffvictim08 (22) posts 11:55 am

  I think this article should be flipped around. Shouldn't it say, "Can Horse Racing Save Slot Machines?" The heck with racetracks! A.C. needs to giddie-up! I would love to see and hear the sounds of racehorses galloping down the Boardwalk. This would be a unique way to revive A.C. and keep the casinos above water. And then the finale would bring the horses to dive off the Steel Pier just like the good ol' days. Yeeeehaaaaw....

• ShelleJeff (1) posts 9:42 am

  Allowing slots at the race tracks in NJ will surely help to kill the casinos in Atlantic City. It will also hurt the benefits received by our senior citizens and increase the decline of the gaming industry in NJ. Its true competition is all around us and we need to support the gaming industry in AC to be more viable so that it can survive. The casinos use to sponsor a lot of events that brought tourists to NJ and Atlantic City to gamble. The decline in the casino business due the competition and economy has hurt many of those events. Let’s review what got us to this point and try to fix the problem quick before it ends what was a very wonderful opportunity for Atlantic City and the State of New Jersey.

• Draconious_Horribilious (16) posts 9:34 am

  Lets bail them out. Its the "New America" you fail and the government gives you money.

• Nikynewark (136) posts 9:26 am

  Adding slots to horse tracks exposes a new generation to the sport of Kings. I am not a track person but can understand how someone would like to study the rider, horse, track conditions etc. It's a common misconception that it's only about the money. If I go to Yonkers, Monticello or Delaware to play slots I enjoy taking a break and watching the horses workout. Clearly the Atlantic City casinos have blown the lead they had from a total monopoly and are trying to climb out of the pit they created. Too bad. The state taxpayer needs the billions that slots at tracks would bring in and it will revitalize an entire industry. If AC wants to save the casino industry go back to one casino/one owner. Competition among the casinos is what's lacking.

• pawins (7) posts 8:30 am

  The only thing that held this off this long was the chance that further investment in Atlantic City could be threatened. Nobody is investing in AC. This is the knife through the heart. They just can't stay away from all the construction jobs and money that would immediately be spent if they allow casinos elsewhere in the state. NJ is not going to let their tax money go over any bridges to nearby states. Forget it AC, you're done. This month you'll see the impact of Beth Sands. Table games are coming to PA, it's just a matter of when. Brush up your resumes, sell the house now.

• Joe--- (216) posts 7:38 am

  A younger generation of race fans have chosen cars over horses. It's a shame, but it's a fact. It is unbelievable that our polititions would even consider throwing yet one more stumbling block in the path of the casino industry in New Jersey. Competition is all around us and they can't figure out why there is less revenue for social programs? I am amazed!

• blacknwhite (531) posts 7:20 am

  PA and everyone else has slots now. Time to share the wealth with another suffering industry. I don't like the casino atmosphere much anyhow. Now the gamblers at the track are much more active. Back and forth to place your bet is good exercise. While some of the older folks can look at the little one armed bandits. A family day out.

• dave202 (101) posts 12:37 am

  Excellent piece for a change. And I notice that Wittkowski had nothing to do with it. Very accurate and well measured. Maybe the state will understand that racing is a dying sport and it's dying for a raft of reasons, not just casinos.

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