As New Jersey owners and breeders prepare to celebrate the fruits of their labors at the third New Jersey Thoroughbred Festival at Monmouth Park Sept. 17, in which five stakes races and $700,000 in purses will be offered for horses foaled in the state, there is a growing sense of optimism about the state's racing and breeding program."Things are looking up in New Jersey," said Tom Swales, vice president of the Thoroughbred Breeders' Association of New Jersey and co-owner of Tee-N-Jay Farm, a Holmdel nursery that stands two stallions. Swales also has horses in training at Monmouth, including multiple stakes winner Trueamericanspirit, whom he bred."I think things are better now than ever," he said.Thanks to a deal with the Atlantic City casinos that began in 2004 and expires in 2007, purses at Monmouth and Meadowlands have been boosted to competitive levels, and a percentage of the casino money was put into the breeders' fund. With average maiden special weight purses for state-breds at $46,000, more than double that of nearby Philadelphia Park in Pennsylvania and more than slots-rich Delaware Park, owning a Jersey-bred has become lucrative.Because the number of live Thoroughbred racing dates in New Jersey has dropped to only 120, a new program that begins later this year pays breeders' awards to Jersey-breds running out of state. From 30 days after the last live race at Meadowlands in the fall to 30 days before the first live race the following year, a horse can continue to earn breeders' awards, though at a slightly reduced percentage than is offered to horses running against open company in the state.Currently, Jersey-breds that finish first through third in any open race at Monmouth or Meadowlands earn a 30% owners award."We'll be paying out between $400,000-450,000 in additional money to Jersey-breds that finish one, two, or three in out-of-state races in open company," said Mike Campbell, executive director of the TBANJ.The out-of-state bonus program is what Campbell and Swales hope attracts new breeders to the state."Our foal crop has remained relatively the same for the last few years--about 315 foals," Campbell said. "That's pretty low compared to other states, but recently Jersey-breds have been performing very well in open graded company."Campbell noted that two graded stakes over the July 4 weekend at Monmouth were won by Jersey-breds--the $150,000 Eatontown Handicap (gr. III), won by Smart n Classy, and the $150,000 Jersey Shore Breeders' Cup Stakes (gr. III), won by Joey P. Both horses earned an additional $15,000 for winning the open stakes.Said Swales, who stands Deputy Warlock for $3,500 at Tee-N-Jay: "The lack of live racing days has really hurt us, and it's really hard to get top-notch stallions to stand here. You really have to do it yourself in this state if you want to get mares to your stallion. The way to get them noticed is to have their progeny sell well at auction, and have them running on the racetrack."We have an up-and-coming program that people just aren't aware of, but I believe there's light at the end of the tunnel."Here are the five stakes that make up the New Jersey Thoroughbred Festival:$100,000 Eleven North Handicap for fillies and mares at six furlongs$100,000 Friendly Lover Handicap for 3-year-olds and up at six furlongs$100,000 Jersey Breeders' Handicap for 3-year-olds and up at 1 1/16 miles$100,000 Jersey Girl Stakes for fillies and mares at 1 1/16 miles$75,000 Papa Riccio Stakes for 3-year-olds at one mileThe Monmouth meet ends Sept. 25. Thoroughbred racing in the Garden State shifts to Meadowlands Sept. 30 for a 30-day meet that runs through Nov. 12.