On September 12, New Jersey Governor Phil Murphy officially signed a pivotal piece of legislation that secures the horse racing industry’s annual purse subsidy, extending it by another six years, with a commitment of $20 million per year through 2029.
However, just a week later, the situation took a dramatic turn when officials from Freehold Raceway announced that the historic venue, which has benefited from approximately $9 million in subsidies since 2019, is set to close its doors permanently on December 28.
This stark contrast raises significant concerns regarding the efficacy of the subsidies and whether lawmakers in Trenton are closely monitoring their impact on the industry.
As Freehold Raceway faced a downward trend in its business, the deteriorating performance was consistently highlighted in annual industry reports mandated by legislation from 2019. This legislation aimed to ensure that the allocation of $100 million over five years had tangible benefits before each annual payment was authorized.
Despite this requirement, the reports for racing seasons in 2019, 2020, and 2021 notably lacked essential revenue data for each racetrack, a critical component stipulated in the legislation that could have indicated growing issues at Freehold Raceway.
Even though racetracks were not mandated to report their performance for 2022 or 2023, legislators moved forward unanimously with extending the subsidies through 2029, which includes an annual allocation of $1.6 million for Freehold Raceway, during a June session.
“This is a problem with a lot of these subsidies. There’s supposed to be all kinds of accountability and we rarely get it, and you end up with the state heavily subsidizing certain industries with not enough information about whether or not the subsidies are working,” said Peter Chen, senior policy analyst for New Jersey Policy Perspective.
“So $20 million within the scope of a $58 billion budget, sometimes the legislature just sort of shrugs. But it’s a serious investment. There’s a lot of things the state could do with $20 million, or even $1.6 million.”
This issue is reflective of a broader national debate, where public funding continues to support the horse racing industry across various states, even as the number of active racetracks has dwindled, with nearly 50 shutting down since the year 2000.
When the Racing Commission, the agency responsible for overseeing the industry, was questioned regarding the absence of revenue data, it responded with a statement affirming that the purse subsidy impact reports contained the amount of handle. However, the commission indicated that more detailed information regarding overall industry performance is accessible through annual reports posted on its website.
While some limited revenue data can be found in these annual reports, they lack comprehensiveness and omit critical statistics, specifically those related to sports betting revenues—a vital alternative source of income. Moreover, the state Division of Gaming Enforcement’s monthly reports on sports betting do not detail what portion of the betting revenue goes to the individual racetracks, and specifically, what percentage contributes to funding purses.
Crucially, there is no quantitative assessment of how the purse subsidies have influenced the distribution of purse money across each racetrack, nor is there clarity on how this money flows throughout the industry.
Having access to such data could have informed elected officials about the actual necessity for subsidies, potentially shedding light on the decline experienced by Freehold Raceway.
The horse racing industry has actively lobbied state lawmakers, contributing over $1.6 million in campaign financing since the year 2000, according to an analysis conducted by the Asbury Park Press. During this period, the industry has received approximately $326 million in financial assistance, including a significant $176 million from Atlantic City casinos between 2004 and 2010.
“I look at everything as what is the return on investment,” emphasized Assemblyman Alex Sauickie (R-Ocean), a co-sponsor of the latest subsidy legislation. “The impact for jobs that these tracks create in the state is significant. Maybe not the impact of some other industries, but within this area stats show that they create thousands of jobs, so I’m a fan of that.”
According to an August 2022 economic impact study commissioned by the racing industry, which examined the outcomes from the first three years of subsidy allocations, the total economic contribution of the industry to the state stands at a staggering $564.3 million annually.
“Certainly, there are differing opinions about how much economic impact it has,” Chen remarked. “This is why having independent, state-produced reports are so important.”
Governor Murphy initially pocket-vetoed the subsidy bill during the winter lame-duck session, proposing a reduced $15 million for the industry. However, lawmakers reinstated the amount to $20 million in June through a budget resolution, but with no clear rationale provided for the increase.
The report on the 2021 season for Freehold Raceway revealed substantial declines in critical metrics, with total handle plummeting to $54.9 million in 2021 from $72.7 million in 2016. The decline in live handle and off-track wagering during the same timeframe also mirrored this downturn.
Total handle is a measure of the overall money wagered on races, of which the racetrack receives a percentage, part of which is allocated toward purse funding. These metrics, alongside live attendance figures and the number of racing days, were essential performance indicators specified by the 2019 bill, revealing troubling trends for Freehold Raceway.
Regarding purses at Freehold Raceway, there was a notable increase, rising 38 percent from 2018 to 2023, from $4.6 million to $6.4 million, despite the track’s overall decline.
Horsemen’s group, track operator silence
Mark Ford, executive director of the Standardbred Breeders and Owners Association of New Jersey, opted not to comment on the situation, citing a recent lawsuit against Freehold Raceway’s owners, which alleges breach of contract regarding the track’s operation, along with claims for unpaid amounts linked to sports betting.
There remains uncertainty about the fate of Freehold’s $1.6 million subsidy. During an October 2 Racing Commission meeting, a representative from the Meadowlands, another prominent harness track, suggested managing races for Freehold horsemen, contingent upon acquiring Freehold’s subsidy funds.
When inquired about this proposition, the Racing Commission stated: “The Freehold purse subsidy has not been allocated at this time. The New Jersey Racing Commission has no further comment.”
Freehold Raceway was acquired in 1999 for a substantial $46 million by Pennwood Racing, a joint venture consisting of Penn Gaming and Greenwood Racing. The company has not responded to multiple requests for comments regarding the impending closure and the future direction of the track.
Freehold Raceway holds the distinction of being the oldest horse racing track in the United States, with its racing history dating back to December 1853, when the Monmouth County Agriculture Society was established to conduct an annual fair that included harness racing.
