08/10/2012 3:27PM

New Jersey offtrack wagering is a waiting game


New Jersey’s newest offtrack wagering facility – the luxurious, 25,000-square foot Winners in Bayonne – opened last month with the hype that it could replicate the $5 million of revenue produced annually by Favorites, a similar facility in nearby Woodbridge.

But on a recent weekday afternoon the 150 televisions outnumbered the patrons at Winners, where handle has not lived up to the expectations of owner Jeff Gural, who also operates Meadowlands racetrack.

“It’s been a little disappointing . . . I’m just worried it’s too nice. It’s gorgeous,” Gural said. “We didn’t really know what to expect. So many people told me it was going to be a home run that maybe I expected too much.”

Gural received permission to open four offtrack wagering sites (OTWs) when he took over the Meadowlands at the end of 2011, with Bayonne as the first of those. Similarly, when a Thoroughbred horsemen’s group headed by Dennis Drazin agreed to take over the operations at Monmouth Park, the horsemen received the rights to five OTWs, including Favorites. There are now a total of three OTWs in New Jersey, including a Favorites in Vineland in the southern part of the state.

Gural and Drazin will cooperate to open the next seven OTWs, Gural said – the next two by Drazin himself and the ensuing five together, with the horsemen owning two-thirds and Gural owning one-third.

Drazin already has a number of potential sites for the next two and plans to make final choices soon, he said. But the territory he has to work with is limited – Atlantic City Race Course has the rights to wagering facilities in the southern part of the state, while in the north he needs permission from Gural to build an OTW within 20 miles of the Meadowlands.

Still, Gural is not sure that these brick-and-mortar facilities are the future of offtrack wagering in New Jersey.

“It remains to be seen if that’s the right model,” Gural said.

In an effort to make wagering more accessible to casual bettors, Gural believes the money is in bringing machines to bars and restaurants. Previously, however, the state limited that option to just 12 bars and 20 machines, a number that was “a little ridiculous,” according to Gural.

Gural’s intentions for expanding gambling in New Jersey are no secret. In addition to his plans to build a new grandstand at the Meadowlands, he said it is “inevitable” that there will be casino games there as well. The question is when and if the governor’s office will allow that because of concerns about the impact on casinos in Atlantic City.

In 2007, Christian Capital Advisors studied the impact of bringing expanded casino gaming, specifically video lottery terminals – slot machines – to northern New Jersey. Twenty-one hundred VLTs at both the Meadowlands and Monmouth would generate $411.3 million in their first year of operation while reducing Atlantic City gross gaming revenue by $48.1 million or just 1.1 percent, according to the Christiansen report.

Although the state is protective of Atlantic City, many gamblers who might choose to play in northern New Jersey now play in Pennsylvania and New York. Gural already owns racinos at Tioga Downs and Vernon Downs in central New York and has a stake in Sands Casino Resort Bethlehem in Pennsylvania. From the latter, in particular Drazin said, New Jersey loses out on tax revenue. While Drazin acknowledges that bringing casino games to northern New Jersey is an inevitability, he said he knows that he has to wait. The governor and the state senate president, Stephen Sweeney, insist on giving Atlantic City five years to get its act together, though when that clock started is unclear, Drazin said.

“It’s a north-south fight that seems deadlocked at this point,” Drazin said. “It’s been frustrating for 12 years playing this game.”

Without the certainty of knowing when casino gaming will become a reality, Gural and Drazin are left to develop the rest of the OTW facilities, even if they know the future of offtrack wagering lies somewhere else.

For Gural, that means working with Drazin on building OTWs while waiting for permission to take gambling in northern New Jersey to the next level.

“The assumption is that they would recognize that it’s costing the taxpayers money not to have a casino at the Meadowlands simply because those people are not going to Atlantic City,” Gural said. “Atlantic City has a lot of power in New Jersey. It makes it hard to get anything done.”