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Track operators get more time to build betting parlors without penalty

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Regulators have given additional time to four racetrack operators that are building the state's network of off-track wagering parlors, but the companies must now provide monthly progress reports about the long-stalled projects.

At a meeting Wednesday, the state Racing Commission voted that the operators had made enough progress toward developing the betting parlors, allowing them to retain their rights for the potentially lucrative sites. A contrary vote would have required the firms to pay the state $1 million to retain the rights past a June 28 deadline, which was set by the Legislature to help speed the build-out of the parlors.

The firms — which operate Monmouth Park, Meadowlands Racetrack, Freehold Raceway and Atlantic City Race Course — share the development rights for 15 facilities under a contract signed in 2003. A law enacted two years earlier outlined the plan for the statewide network, but only three parlors have opened since then.

Commission officials said Wednesday that Freehold's parent company, Pennwood Racing, has identified sites for three new parlors in Bordentown, Maple Shade and Middlesex County. The firm, a joint venture between Penn National Gaming and Greenwood Racing, has faced uncertainty over the fate of its remaining permits.

The same was true for Greenwood, which separately owns Atlantic City Race Course and has the rights to one unused license. But Frank Zanzuccki, the commission's executive director, said the firm has committed to a location in Egg Harbor.

The commission did not address a lawsuit filed last month by Pennwood and Greenwood, which alleges the June 28 deadline and several recent laws violate the 2003 contract governing the OTW sites. The suit also claims the laws favor the Meadowlands and Monmouth Park tracks, which are state-owned but have been leased to private operators.

Chris McErlean, Pennwood's vice president of racing, told the commission Wednesday the firm has "made good faith efforts here to go forward with these licenses, and we intend to pursue these opportunities." But he also said the company "has been somewhat stymied" by statutory changes and other developments that were "putting a cloud over what may be happening with those licenses."

"There is so much happening right now in the New Jersey industry — the leases of the tracks, changes in legislation — it makes it very difficult to be able to say we have a clear path to be able to do things," McErlean said. "We are committed to New Jersey racing."

The commission's vote came despite protests from the state's standardbred and thoroughbred horsemen's groups. Under the law, a horsemen's group would be next in line to receive an OTW permit that is forfeited by a track operator.

Tom Luchento, president of the Standardbred Breeders & Owners Association of New Jersey, accused Pennwood officials of dragging their feet for several years. He also argued that letters of intent for the OTW parlors, which Freehold has signed with prospective landlords, were not enough to show their progress.

"It's been excruciating, for the last 10 years, to go through, waiting for them to save our industry," Luchento told commissioners. He said the organization is prepared to open a parlor South Jersey if it were awarded a permit.

The commission Wednesday also said the state Thoroughbred Horsemen's Association, which operates Monmouth Park, and New Meadowlands Racetrack LLC had made enough progress to retain their OTW rights. Under a law enacted last year, the operators would be given more time if their tracks and OTW rights have been sold or leased.

The commissioners also noted New Meadowlands Racetrack, which is owned by real estate mogul Jeff Gural, was preparing to open its new OTW parlor in Bayonne next month. The firm still has the rights to three unused OTW licenses, while the horsemen group has four.

The OTW facilities are seen as crucial to the survival of the state's horseracing industry, which has been in decline for years and is trying to operate without state subsidies. As a condition of their approval on Wednesday, the commission ordered the four operators to submit monthly written reports on the progress of the developments. The firms also will be required to appear before the panel in six months.

The commission on Wednesday also voted to give $10 million in purse subsidies to support live racing at the tracks for next year. But the action is subject to a veto by Gov. Chris Christie, who rejected a similar vote last year amid vows to end the state's financial involvement in the industry.

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Joshua Burd

Joshua Burd

Josh Burd covers real estate, economic development and sports and entertainment. Before joining NJBIZ in 2011, he spent four years as a metro reporter in Central Jersey. His email is joshb@njbiz.com and he is @JoshBurdNJ on Twitter.

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