After six-year wait, N.J. gets first OTB

Updated: March 28, 2007, 11:48 AM ET
By Mike Farrell | Daily Racing Form

The first offtrack betting facility in New Jersey will have its official ribbon-cutting ceremony Thursday night in Vineland amid a blaze of pomp and ceremony, with local politicians and racing officials in attendance. The opening comes almost six years after Acting Gov. Donald T. DeFrancesco signed the enabling legislation in the summer of 2001.

The facility, called Favorites in Vineland, will open to the public on Friday. It is owned by Greenwood Racing, whose holdings include Philadelphia Park, Atlantic City Race Course, and a network of Pennsylvania OTBs.

Favorites comprises 13,500 square feet, and is dominated by an oval sports bar. Fans can watch ballgames and races on high-definition televisions while dining on a grill menu. It will be open noon to midnight, seven days a week.

"The place looks great," said Greenwood CEO Hal Handel. "If you think of the Pennsylvania OTBs, this is a lot more modern-looking. I think people are going to be very, very pleased. It's going to have a lot more of a sports bar feel than a restaurant feel."

The 2001 legislation authorized 15 OTBs in New Jersey, but also included restrictive guidelines that delayed implementation. The law granted the OTBs to the New Jersey Sports and Exposition Authority, which owns and operates Monmouth Park and the Meadowlands Racetrack, with the stipulation that the authority reach "participation agreements" with the owners of the state's other racetracks: Greenwood and Pennwood, a joint venture between Penn National and Greenwood which owns Freehold Raceway.

Hammering out the participation agreement took more than a year.

"It wound up a fairly equitable split but it made for a cumbersome way to deal with it," said Dennis Dowd, senior executive vice president of racing for the authority. "That's what took so long."

Under the participation agreement, the authority got nine outlets in the more populous northern counties of the state, Pennwood got four in Ocean, Middlesex, and Mercer counties in the middle of the state, and Greenwood got two in southern part of the state.

With the participation agreement in place, finding sites became a daunting challenge. The enabling legislation gave local municipalities veto power over proposed sites and required OTB operators to purchase existing liquor licenses.

"The law gives a municipality absolute veto power," Dowd said. "They can say 'We don't want you' and we have to go away. We have to do political temperature-taking. We know in some communities we are very welcome, in others we are not."

It was far different from what Greenwood experienced in Pennsylvania.

"The Pennsylvania system makes certain presumptions that if you are not within a certain number of feet of a school or a church, the usage is deemed acceptable," Handel said. "In New Jersey, there is a very strong tradition of home rule and that was written into the legislation. We've gotten favorable responses in some towns and not so favorable in others.

"In Pennsylvania, you get a special liquor license automatically with the site," he added. "In New Jersey, you have to find one and buy it. Even if you get all the governmental approvals, if you can't find a liquor license in that town commercially available, you're still dead in that town.

"You need a deal for space, a liquor license at an affordable price, and a town governing body that will say yes. It's not that easy to find all three."

Which explains why Vineland, a town of 56,000 in rural southern New Jersey, is the first site. Local officials made it easy, approaching Greenwood about locating an OTB in their town.

"We had a very, very favorable political climate down in Vineland," Handel said. "It was almost a natural."

Vineland will probably be the smallest New Jersey OTB in terms of physical size and handle.

"We don't think it will be rock 'em, sock 'em financially," Handel said. "We're only projecting Vineland to handle $20 million a year, whereas I think most of the others in New Jersey will be looking to be between $35 and $50 million a year. They will be in more populous areas."

Greenwood invested $4 million in Vineland. The projected cost for the authority's first OTB, which is projected to open in Woodbridge in August, is $6 million.

Pennwood has begun work on its first site, in Toms River.

New Jersey comes late to the OTB dance. Neighboring states Pennsylvania, New York, and Connecticut already have fully mature offtrack networks in place. Since the OTB legislation was approved in 2001, the landscape has changed dramatically with the introduction two years ago of Internet and phone wagering in New Jersey and the arrival of slot machines and video lottery terminals at nearby racetracks in Pennsylvania and New York.

Even in the face of that burgeoning competition, both Handel and Dowd believe OTBs still have a place.

"I believe the OTB experience is one of camaraderie," Dowd said. "I love the experience of computer and phone betting, but you are sitting there alone. You walk into an OTB and every track is up on a screen and you're sitting with your buddies. It's an experience that I think will continue to have value."

Handel said offtrack betting remains an important part of the business model in Pennsylvania.

"We operate six of them in Pennsylvania and they can be quite profitable," Handel said. "You find a parimutuel customer likes convenience. They will visit racetracks when it's convenient. They will use a phone bet account at home, or when the weather is such that they don't want to travel outside. If an OTB is within 15 to 20 miles of where they live, these things get ample use.

"If you say we're going to do account wagering or offtrack betting without the other, you are making a fundamental mistake. They are both delivery methods that make the game more accessible to people."