Study: NJ Horse Industry Too Valuable to Lose

A report says New Jersey has a lot to lose if it doesn't help the horse industry.

A report from the Rutgers Equine Science Center details the economic impact of horse racing and breeding in New Jersey and says revenue from alternative gaming at racetracks has supported and fueled those programs in other states.

The report, released July 28, was written by Dr. Karen Malinowski, director of the Equine Science Center at Rutgers University, and Ryan Avenatti, who has a master of science at Rutgers. It was prepared to assist the Governor’s Task Force on the Future of the Horse Racing Industry, which is charged with making recommendations on the industry by 2010. The industry’s purse subsidy from Atlantic City casino revenue expires next year.

An executive summary with the report says the New Jersey equine industry is valued at about $4 billion; generates about $1.1 billion a year for the state’s economy; accounts for about 13,000 jobs; and pays about $160 million a year in taxes. The economic impact of the state’s four racetracks is about $502 million a year, the report says.

Also, equine-related facilities account for about 176,000 acres and preserve open space, the report says. Of the 42,500 horses in New Jersey, 12,500 are involved in racing-related activities, the report says.

The report cites figures from other states with racetrack gaming to make a case for having such a program in New Jersey. The casino industry has fought such a plan, though it could be crunch time given expiration of the three-year purse subsidy.

New Jersey is now surrounded by states with racetrack gaming: Delaware, Pennsylvania, and New York.

“In 2006, we predicted that as surrounding states incorporate slot machines and video lottery terminals into their gaming portfolio, the horse racing industry would not be the only industry impacted, but the entire casino/gaming industry would feel effects as well,” Malinowski said in the executive summary. “The installation of video lottery terminals at New Jersey racetracks has the potential to be a ‘win-win’ situation for both the racing and casino industries. The revenue would enhance the state budget significantly and provide capital for use by the horse racing industry to keep it competitive.”

Though the report advocates racetrack gaming, it notes any revenue must be used for more than purse and breed development enhancements “to ensure continued viability” for the industry. The report mentions marketing of live racing and creation of a racing brand; new wagers; reducing the cost of regulation; investment in capital improvements; spending money on integrity-related programs; and allocating funds for equine research.

The report suggests New Jersey racing interests move to expand the off-track betting network in the state—only three of a permitted 15 parlors have opened—but recognize potential impact on live handle. According to New Jersey Racing Commission statistics, handle at OTB parlors went from $30.8 million in 2007 to $140.7 million in 2008.

The Rutgers report claims the “current business model” isn’t viable, and new revenue sources must be found for the racing and breeding industry. It also suggests a “partnership between the casino and horse racing industries” is needed in New Jersey.

“This is no longer a discussion about the competition between the horse racing and casino industries,” the report says. “It is about the competition between two important New Jersey industries and the rest of the region.”

The full report is available through the Hall Institute of Public Policy.