New Jersey Fixed-Odds Pilot Program Cleared for 2021

Even as a separate bill to allow fixed-odds wagering on in-state horse races is making its way through the New Jersey Legislature, the state's racing commission voted 4-0 Nov. 18 to give consent for licensees to try a fixed-odds pilot program during 2021 that would be limited to bets on out-of-state Grade I races.

The vote was unanimous but not without misgivings, as several commissioners voiced concerns prior to the vote that fixed-odds betting would cannibalize the existing pari-mutuel system and eventually erode New Jersey's racing industry.

And one New Jersey Racing Commission (NJRC) member had to be corrected just prior to the vote because he thought the board had been discussing exchange wagering and not fixed-odds betting (It was unclear who, because commissioners often cross-talked and did not identify themselves when speaking during Wednesday's teleconference meeting).

But the fact that the current bill, introduced Oct. 31, seems to have considerable political heft behind it appeared to be an overriding factor in the unanimous vote, as the presumed wishes of elected and appointed officials surfaced several times during the discussion.

“The pilot program would be regulated by the Division of Gaming Enforcement (DGE),” explained Judith Nason, the NJRC's executive director. “DGE has the authority to regulate fixed-odds wagers, which [are] also known as sports wagers.

“So, the question before you today is whether the commission wants to grant its consent to fixed-odds wagers [on] Grade I stakes races of national interest that are being conducted in another state through Dec. 31, 2021, which would allow the pilot program to move forward,” Nason continued. “It would allow the attempt to gauge interest [in] fixed-odds wagers on horse racing. At the same time, there is proposed legislation that is moving forward that would broadly allow fixed-odds wagers on horse races.”

Asked by a commissioner what the benefit of the pilot program would be to New Jersey's horse racing, Nason replied, “It would bring benefits to the sports wagering operators, and to a certain extent to, you know, that the revenue can be shared and some of it can be directed for purse money.”

Dennis Drazin, the chairman and chief executive of Darby Development LLC, which operates Monmouth Park and its sports book, weighed in with a different perspective.

“I think it's commendable that we start with a pilot program until such time as the legislature has an opportunity [to vote on it] and the governor signs off, assuming we get to that point,” Drazin said.

“We've been hung up for six months on whether or not a wager on a horse race is s sports bet or a horse racing bet, because they're handled differently. The proposed legislation says it's a horse racing bet,” Drazin said.

“I gather that the attorney general, if I read Judy [Nason] correctly, has weighed in and feels that we should start with the pilot program for Grade I races only,” Drazin said.

Commissioner Michael Arnone expressed doubts about the long-term repercussions of fixed-odds betting prior to casting a “yes” vote in line with the other commissioners.

“I get the feeling like we're the good monsignor getting called up to give last rites to the pari-mutuel system. I mean, I think the pari-mutuel system will lose out in the end if it has to compete,” Arnone said. “We'll see what happens, but unfortunately, I've got a very negative view of it.”

Drazin said his support for trying the system is based partially on repeated complaints he hears from pari-mutuel customers about fluctuations in odds after a race goes off.

“The Australian [fixed odds] model has proven to grow their industry. And with a significantly less population in Australia than we have here, they out-handle us,” Drazin said. “I think it's important that we look at this. Nobody knows what the future is going to be…In the early days, it will have a minimal impact [on pari-mutuels]. But five years down the road, a significant portion of the handle will be fixed odds.”

Prior to the unanimous vote, Drazin had asked the NJRC to widen to scope of the pilot program to include all graded North American stakes races, graded international races, and Monmouth's two in-state Grade Is, the Haskell S. and United Nations S.

But Nason wouldn't allow those modifications to the template for the pilot program, which had been handed down by the DGE. That leaves New Jersey's bet-taking licensees with about 90 to 95 Thoroughbred races on which to offer fixed-odds wagering in 2021.

Based on Drazin's comments, Monmouth appears set to embrace the pilot system. When asked by the commission, a Meadowlands official declined the opportunity to comment on the program.

“Lastly, I would ask you to just consider what you're going to do if one track–and I'll just give you an example, let's say Churchill Downs–decides they're going to authorize fixed odds on the [GI] Kentucky Derby, but they're not going to give it to anybody else except to [the] Churchill [advance-deposit wagering system that] operates online in New Jersey. Do you think that that would have a negative impact on the rest of us?”

Thoroughbred Dates Approved for 2021

Also on Wednesday, the NJRC unanimously approved 2021 Thoroughbred dates at Monmouth (53 days, May 28-Sept. 26) and for a turf-only meet at the Meadowlands (nine days, Oct. 1-30).

John Heims, Monmouth's racing secretary and director of racing, said that the track is going back to “more of a traditional” Memorial Day weekend opening like in past seasons. That calendar, he added, allows Monmouth to better dovetail with the closing meets at Oaklawn Park and Tampa Bay Downs, “so I think it actually bolsters out ability to offer a better racing product.”

In 2020, the New Jersey Thoroughbred Horsemen's Association had approval to run 56 days at Monmouth and 19 at the Meadowlands. But the pandemic lopped off the start of the Monmouth meet and caused the cancellation of what was supposed to be the first dual-surface Thoroughbred meet at the Meadowlands since 2009. Those dates were transferred to Monmouth instead, where a total of 60 programs were run this year.

The topic of running both dirt and turf races at the Meadowlands in 2021 did not come up at Wednesday's meeting.

Monmouth Reports $2.5 Million-plus Racing Loss

A separate section of the agenda dealt with the distribution of monies from the Casino Simulcasting Special Fund, which requires New Jersey racetracks to show evidence that their financial well-being has been negatively affected by casino simulcasting and/or that the racetrack is “financially distressed” in order to receive those funds.

During that agenda item, Nason said all three state tracks (Monmouth, Meadowlands, Freehold Raceway) met those requirements. Although a specific time frame for the financials was not mentioned, Nason read into the record that “Monmouth Park reported losses in excess of $2.5 million from racing operations while also citing the [NJTHA's] debt obligations to the [New Jersey] Sports and Exposition Authority, which exceed $9 million through 2024.”