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June 14, 2018

What Does Legal NJ Sports Betting Mean For The Horse Racing Industry?

June 14, 2018
horse racing

New Jersey has been fighting to allow legal and regulated sports betting at racetracks and casinos inside state lines since 2011.

On May 14, it was finally granted that right. In a 6-3 decision, the Supreme Court of the United States declared the Professional and Amateur Sports Protection Act of 1992 (PASPA) unconstitutional. PASPA was the law that made full-scale sports betting illegal just about everywhere outside of Nevada.

PASPA’s repeal opened the door for all 50 states to legalize sports betting, and New Jersey is walking right through it.

Lawmakers in the Garden State immediately began putting together legislation to regulate the New Jersey sports betting market. It passed on June 7.

On Monday, Gov. Phil Murphy signed the bill into law, allowing New Jersey casinos and racetracks to open up the state’s first live and mobile sportsbooks.

The NJ horse racing industry

The advent of online gambling helped turn around a decade of declines for the Atlantic City casino industry in 2016. But sports betting should mean even more for the local horse racing industry.

All three New Jersey horse racing facilities are getting in the game. Monmouth Park in Oceanport has been waiting patiently for five years for New Jersey to get legal sports betting.

In 2013, William Hill was already Nevada’s leading sportsbook operator when it signed a deal with Monmouth to become the racetrack’s exclusive sports betting provider. The parties made that move in anticipation of the state winning its legal battle over sports betting.

William Hill paid $1 million for the rights to sports betting at the track and agreed to a 50/50 split of all future sports betting revenues.

Monmouth used the cash to renovate a cafeteria behind its grandstand. The William Hill Race & Sports Bar at Monmouth Park opened later that year with plans to convert it into a full Las Vegas-style sportsbook when legalization came through.

The first big boon for horse racing

As a part of the deal, William Hill also became title sponsor of the $1 million Haskell Invitational horse race. It runs in July at Monmouth, a move that marked sports betting’s first big victory for the horse racing industry.

At the time, William Hill brass said sports betting would eventually be legal. The company has since doubled its $1 million investment, and Monmouth has matched it.

Once the Supreme Court decision was handed down, William Hill promised to spend another $5 million building a new sportsbook at the track with space for 5,000.

But sports betting at local racetracks should mean more than just investment and improvements at horse racing facilities. It should mean money to help prop up what is otherwise a struggling industry.

William Hill CEO Joe Asher has speculated legal sports betting operators in New Jersey could handle as a much as $10 billion in wagers annually. If racetracks such as Monmouth are in line to get half that new revenue, the horse racing industry won’t struggle for long.

Betfair US and Meadowlands Racetrack

In the same week NJ lawmakers passed regulatory sports betting bill, Betfair US announced it had reached an agreement to launch live and mobile sports betting at Meadowlands Racetrack in East Rutherford.

It also made the same deal with Tioga Downs racetrack and casino in New York. However, Tioga will have to wait for the state of New York to pass sports betting legislation.

Betfair US is a subsidiary of worldwide sports betting giant Paddy Power Betfair. It is the brains behind Betfair online casino, which operates under the Golden Nugget NJ online gambling license. The company also recently announced plans to combine US operations with the daily fantasy sports company FanDuel.

According to Betfair US CEO Kip Levin, FanDuel will be the company’s primary US brand. This means a FanDuel-branded sportsbook opening at Meadowlands Racetrack can’t be far off.

And the track reaping the benefits of legal sports betting won’t be far behind it.

Freehold Raceway looks forward to it

No agreement with a sports betting operator or plans to go it alone has been made public. However, officials from New Jersey’s third horse racing facility, Freehold Raceway, have said they look forward to accepting bets on sports.

Penn National Gaming VP of Racing Chris McErlean has gone on record saying sports betting could be the thing that keeps this Penn-owned track viable. McErlean predicts some people will come to the track to bet on sports.

Ultimately, McErlean says any opportunity for increased revenue and foot traffic at the track is a good thing.

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Saving horse racing

In 2010, then-Gov. Chris Christie pushed for the privatization of state-run horse racing operations. That move marked the end of state-bolstered purses funded by casino tax revenues.

Purses declined from $48 million that year to $23 million just three years later. And betting on horses dropped from $481 million to $266 million over the same period.

The New Jersey horse racing industry has never recovered. But sports betting could be exactly what it needs. In the face of declining attendance and shrinking purses, many horse racing facilities in other states have turned to slot machines to help save them.

Whether installing slots has stopped the decline in bets on horse racing continues to be debated.

However, there is no debating slots have helped the local horse racing industry in most of these states stop the bleeding. In fact, most have been able to survive as a direct result of slots revenue.

New Jersey’s three horse racing facilities are now hoping sports betting can do the same thing for them.

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