New Jersey Horse Racing by the Numbers

By Bennett Liebman
Government Lawyer in Residence
Government Law Center
Albany Law School

Too often in looking at the declining popularity of horse racing in the United States, we focus on the state of New York. New York, despite its difficulties, remains the largest market for horse racing in the country. It was the site of the most significant horse racing for the second half of the nineteenth century and the entire twentieth century. It was the first state with legalized off-track betting. It has arguably the most mature racing market. It is somewhat understandable why the handle declined in New York State over the past half century so that the New York handle for 1990 (the first year of pari-mutuel wagering), adjusted for inflation, was 20 percent higher than in 2015.[1] The New York handle for 2015 was, adjusted for inflation, the lowest in its history.

A more interesting view of the changes in horse racing handle might be seen in New York’s neighboring state of New Jersey. While New Jersey was an important horse-racing venue in the late nineteenth century, anti-gambling efforts during the Progressive Era ended horse racing in New Jersey. After 1893, horse racing stopped in New Jersey as the race track operators feared they would be prosecuted for running disorderly houses or operating a lottery or both.[2] To formally put an end to racing, the New Jersey Constitution was amended in 1897 to ban all forms of gambling. Racing was not allowed until the State Constitution was amended in 1939 to authorize pari-mutuel racing on horses.[4] Horse racing itself did not start up in New Jersey until Garden State Park, in Cherry Hill, New Jersey, opened for thoroughbred racing in 1942. Thus, there had been no horse racing in New Jersey for nearly 50 years.

Even after racing resumed in New Jersey, the tracks were not located in proximity to the New York metropolitan area. There were Garden State Park and Atlantic City Race Course in southern New Jersey and Monmouth Park and Freehold Raceway in central New Jersey. Racing did not start in the New Jersey portion of the metro New York area until the Meadowlands opened for racing in September of 1976. Even in 1976, there were only 86 racing days at the Meadowlands.

New Jersey did not even authorize Sunday racing until approved by the voters in 1990.[5] Additionally, New Jersey was late in the game in adopting both off-track betting and account wagering. Casinos were not authorized to allow wagering on horse races until 1992.[6] Full off-track betting and account wagering were not authorized in New Jersey until 2001,[7] more than thirty years after they were authorized in New York State. New Jersey was far less of a mature market than New York.

Current Condition of New Jersey Racing

The New Jersey Racing Commission’s 2016 annual report shows in significant detail the current condition of New Jersey racing.[8]

New Jersey is left with three operating tracks. Monmouth Park conducted 57 thoroughbred programs in 2016. Freehold Raceway conducted 110 harness programs. The  Meadowlands Racetrack conducted 90 harness programs and 12 thoroughbred programs. New Jersey conducted a total of 269 racing programs in 2016.[9]

This is certainly down significantly from the heydays of racing in New Jersey. There were 774 racing dates in 1986 and 686 in 1976. Nonetheless, before the advent of the New Jersey Sports and Exposition Authority in 1974,[10] New Jersey raced far fewer days. In 1966, there were 228 racing programs, and in 1956 there were 200 racing dates.

Total handle in New Jersey for 2016 was $674,157 million. Over 56 percent of this amount, or $379 million, was wagered away from the tracks, at OTB’s, through wagering accounts, or at a casino.[11] Of the amounts wagered off-track, $179 million was bet via account wagering, $165 million at the six OTB’s and $34 million at casinos. In all, $295 million was wagered at the tracks. Of the amount wagered at tracks, $45 million was wagered on track on the live racing product at these tracks. A total of $430 million was wagered worldwide on New Jersey racing in 2016.

New Jersey began exchange wagering in April of 2016. However, the exchange wagering handle has been, thus far, maintained as a trade secret by online gambling company Betfair which operated the exchange wagering system in New Jersey.

The Not-So-Bad News

In the world of racing economics where bad news seems to overwhelm the good news, the most encouraging numbers are from New Jersey’s account wagering system. Account wagering in New Jersey is limited to New Jersey residents, and it accounts for 26.6 percent of all New Jersey handle. Account wagering handle is up from $99 million in 2012 to $179 million in 2016, although account wagering handle has largely been at the same basic level since 2014. Mobile device handle, which barely existed in 2012, is now up to $52.6 million per year. New Jersey account wagering handle is considerably larger than the account wagering handle of the New York Racing Association, which since the summer of 2016 has marketed itself to the entire nation.[12]

The New Jersey OTB handle of $165.9 million is also not bad news. New Jersey only has six OTB locations, and the OTB handle has only dropped by 3 percent since 2013.[13] One might have anticipated that OTB handle would have fallen more significantly as account wagering increased. That drop appears to have occurred most noticeably at the Bayonne OTB branch, where handle has decreased by 29.2 percent since 2013. The other OTB branches that were in existence before 2013 have suffered losses, but their losses are less than that of the Bayonne branch. Vineland handle is down 13 percent, Woodbridge is down 20 percent, and Toms River is down 10 percent. Nonetheless, overall OTB wagering has held up in New Jersey over the past five years.

The Bad News

Despite the not-so-bad news at the account wagering and off-track sites, there is plenty of bad news from New Jersey racing.

First of all, the total New Jersey handle, when accounting for the cost of living, is dismal. New Jersey “real handle” [14] is 27.8 percent of the 1986 handle, 25.1 percent of the 1976 handle, 28.2 percent of the 1966 handle, and 27.9 percent of the 1956 handle.[15] You might reasonably anticipate declines in 1976 and 1986 when there were more live racing programs in New Jersey than in 2016, but there was considerably less racing in New Jersey in 1966 (228 programs) and 1956 (200 programs). Even though there was far more racing in New Jersey in 1986 than in 2016, the popularity of racing was starting to lag. The New Jersey Racing Commission in its 1986 report noted, “The New Jersey racing industry enters 1987 with the awareness that it must confront the problem of declining handle and attendance with a well-defined plan for the future.”[16] A 1982 Rutgers study on racing had noted that the average daily handle and the average daily attendance were beginning to decline in New Jersey in the late 1970s and early 1980s.[17]

The handle at the individual tracks is even more dismal. Handle at the tracks was $295 million in 2016 with $119 million at the Meadowlands. In 1986, where there was inter-track simulcasting between the New Jersey tracks, and there was no OTB or account wagering, the tracks handled $2.4 billion in inflation-adjusted handle. Wagering at track facilities in real terms has declined by 87.7 percent since 1986. At the  Meadowlands, the drop has been even deeper. Total facility handle at the Meadowlands has dropped by 90 percent in real terms since 1986.

It certainly would be anticipated that live handle would decrease at tracks in an era where people in New Jersey can bet at OTBs or thorough account wagering on most every racing product in the world. Nonetheless, it might also have been anticipated that the total handle on New Jersey racing might not suffer significantly, since people throughout much of the world have the opportunity to wager on New Jersey racing. The worldwide handle on New Jersey tracks should counterbalance the fact that New Jerseyans are betting less on the Jersey product. That counterbalance has not occurred. Total wagering on New Jersey racing shows the state at its weakest. A total of $430 million was wagered worldwide on New Jersey racing in 2016. The 2016 handle on New Jersey racing in real dollars is now 17.5 percent of the track handle in 1986, 16 percent of the handle in 1976, 18 percent of the handle in 1966, and 17.8 percent of the handle of 1956. In real terms, Jersey track handle is 13 percent lower than the real handle at Garden State in 1943 where there were 50 days of racing.[18]

New Jersey no longer measures attendance at its racetracks. The numbers apart from the major days of racing at Monmouth and the  Meadowlands must be miniscule in comparison to the past. Attendance was 6.74 million at the New Jersey tracks in 1981[19] and 6.4 million in 1986.[20] By now, it would be difficult to believe that the daily attendance for the entire state exceeds one million. Despite decent account wagering numbers and not-too-awful OTB numbers, the fact is that New Jersey racing is a shell of what it once was. The economic conditions of the New Jersey racing industry are not significantly different than the New York racing industry.

 

[1] Bennett Liebman, “No Dinero from American Pharoah: New York Horse Racing in 2015,” Saratoga Institute on Equine, Racing, and Gaming Law blog (July 25, 2016), https://saratogainstitute.wordpress.com/2016/07/25/no-dinero-from-american-pharoah-new-york-horse-racing-in-2015/.

[2] “No Racing in New Jersey,” N.Y. Times, April 1, 1894.

[3] N.J. Const., art. IV, § VII.2 (effective October 19, 1897). See generally Fundamental Laws and Constitutions of New Jersey 1664-1964 at 174 (Julian P. Boyd ed., Princeton, N.J., Van Nostrand, 1964).

[4] Id.

[5] “New Jersey Voters OK Sunday Racing,” Associated Press, L.A. Times, November 8, 1990.

[6] Ch. 19, L. 1992; N.J.S.A. 5:12-191. The same constitutional amendment that authorized Sunday racing also permitted casinos to wager on horse racing at New Jersey tracks.

[7] Ch. 199, L. 2001, N.J.S.A. 5:5-128.

[8] http://www.nj.gov/oag/racing/downloads/ar2016.pdf.

[9] The shuttered racetracks that conducted pari-mutuel racing in New Jersey were Garden State and Atlantic City.

[10] The New Jersey Sports and Exposition Authority was the state agency established to construct and operate the Meadowlands.

[11] In 2016, the Borgata Hotel and Casino was the only Atlantic City-based casino offering wagering on horse racing.

[12] See NYRA Board meeting of December 14, 2016, https://www.nyra.com/belmont/about/board-meetings#.

[13] Two OTB branches have opened since 2013 at Gloucester and Hillsborough.

[14] Real handle or inflation adjusted handle is determined in reference to the consumer price index using the consumer price index of the Bureau for Labor Statistics. https://www.bls.gov/data/inflation_calculator.htm.

[15] The sources of New Jersey handle information are derived from the annual reports of the New Jersey Racing Commission for the years 1986, 1976, 1966, and 1956.

[16] Forty-Seventh Annual Report of The New Jersey Racing Commission (1986).

[17] Rutgers Graduate School of Management Interfunctional Management Program, Analysis of the New Jersey Racing Industry 5 (1982).

[18] “Daily Camden Handle $720,377 for 50 Days,” New York Sun, September 13, 1943. For the year 2016, New Jersey handle was 11.7 percent higher in real terms than it was for the first New Jersey racing season in 1942 when the only racing was 55 days at Garden State.

[19]  Rutgers Graduate School, supra note 17 at 5.

[20] Forty-Seventh Annual Report of The New Jersey Racing Commission, supra note 16.

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