New Jersey Racino Bill Clears First Committee Hurdle

A state bill that would allow New Jersey’s two existing horse-racing facilities, at the Meadowlands and Monmouth Park, to operate as state-licensed “racinos” has cleared its initial hurdle in a state Assembly committee on a narrow 4-3 vote.

new_jersey_state_house_capitolThe measure, Assembly Bill 4255, passed the chamber’s Tourism, Gaming and the Arts Committee last Monday.  The bill, which will allow for online casino-style gaming at the two facilities, should they partner with any of New Jersey’s existing casinos, has returned to the full Assembly floor for a full second reading before returning to committee.  The extra reading was necessary due to additional language being inserted into the bill, clarifying the legal exceptions to New Jersey’s existing gambling laws that the measure’s passage would entail.

The two racing facilities have long pushed for additional revenue streams to complement their pari-mutuel offerings.  Both facilities, and in particular Monmouth Park, had looked toward legalized sports betting as that opportunity.  However, New Jersey’s legal battles with the US federal government’s PASPA law, which is defended by the US’s major sports organizations, has delayed those prospects.

The racino option has always been an alternative, and A4255 was introduced in late October.  The bill’s three co-sponsors are Reps. Ralph R. Caputo, Ronald S. Dancer, and Valerie Vainieri Huttle.  Dancer served as the bill’s author, while Caputo, in particular, has been a prominent backer of previous pro-gaming bills in the state.

The purpose of the bill takes on increased meaning with the resounding failure of a state-wide referendum last month, in which voters turned down the possibility of allowing land-based casinos outside of Atlantic City, the only legal locale for such in the state.  A4255 would accomplish that, in a sense, if via computer terminals rather than physical one-armed bandits and table games.

Let’s look inside A4255.  Here’s the statement of the bill’s intent, which actually undersells its intended reach:

This bill would permit a running or harness horse racetrack in this State to enter into an agreement with a casino located in Atlantic City, or such a casino’s Internet gaming affiliate, that allows the racetrack’s premises to be available as a venue at which the holder of an Internet gaming account may place wagers at casinos using the Internet.

The Division of Gaming Enforcement will have jurisdiction over Internet gaming at casinos that originates from racetracks and will establish minimum standards for the equipment used and locations at a racetrack from which wagers may be placed. Internet wagering from racetracks will not be subject to regulation by the New Jersey Racing Commission. A casino, or its Internet gaming affiliate, will compensate a racetrack licensee for its services as provided in the terms of the agreement. The provisions of the Internet gaming law, [] will apply to the placing of wagers at casinos from racetracks, except where inconsistent with the bill’s provisions. The bill creates an exception for racetracks from the prohibition in existing law on so-called “Internet cafes.”

And on to the basics of the bill itself, which exists as little more than a placeholder at this early stage.  Describing itself as “An act allowing horse racetracks to be available for placing
wagers at casinos in Atlantic City using the Internet,” the bill’s body consists of only a few paragraphs, to be inserted as an amendment into New Jersey’s existing online gambling laws.  Part of that is the clarification added before last week’s committee vote.

The bill’s core text:

1. No organization or commercial enterprise, other than a casino located in Atlantic City or its Internet gaming affiliate that has been issued a permit to conduct Internet gaming and has located all of its equipment used to conduct Internet gaming, including computers, servers, monitoring rooms, and hubs, in Atlantic City, shall make its premises available for placing wagers at casinos using the Internet or advertise that its premises may be used for such purpose. An organization or commercial enterprise that is determined by the division to have violated the provisions of this section shall be subject to a penalty of $1,000 per player per day for making its premises available for placing wagers at casinos using the Internet and of $10,000 per violation for advertising that its premises may be used for such purpose.

This section shall not prohibit a casino in Atlantic City, or such a casino’s Internet gaming affiliate, from entering into an agreement with a running or harness horse racetrack in this State, under which the racetrack’s premises may be made available for placing wagers at casinos using the Internet, as permitted by section 2 of [this bill], and shall not prohibit advertising that a racetrack’s premises may be used for such purpose.

2. (New section) A running or harness horse racetrack in this State may enter into an agreement with a casino located in Atlantic City, or such a casino’s Internet gaming affiliate, that allows the racetrack’s premises to be available as a venue at which the holder of an Internet gaming account may place wagers at casinos using the Internet. Any such agreement shall be submitted to the Division of Gaming Enforcement for the division’s approval, which shall not be unreasonably withheld. The division shall have jurisdiction over Internet gaming at casinos that originates from racetracks and shall establish minimum standards for the equipment used and locations at a racetrack from which wagers may be placed. Internet gaming from racetracks shall not be subject to regulation by the New Jersey Racing Commission. A casino, or its Internet gaming affiliate, shall compensate a racetrack licensee for its services as provided in the terms of the agreement. The provisions of [existing laws] shall apply to the placing of wagers at casinos from racetracks except where inconsistent with the provisions of this section.

Thus would the exception for racinos be created, allowing them to operate in the manner of an Internet cafe dedicated to offering gambling on state-licensed sites.

As to the bill’s prospects, they’re iffy.  While gambling proposals generally draw broad support in New Jersey, this bill’s alleged parallels to the recently defeated referendum on state-wide gambling may work against it.  One difference to note is that A4255 would grant racino status to existing pari-mutuel facilities, while the defeated referendum would have allowed traditional casino development by other investors.  That difference, however, might not be enough.