New Jersey Racing Commission, Frank Zanzuccki, Executive Director. See Summary below for explanation of exception to calendar requirement.

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1 LAW AND PUBLIC SAFETY NEW JERSEY RACING COMMISSION Horse Racing Elimination of Wagering Proposed Amendment: N.J.A.C. 13: Authorized By: New Jersey Racing Commission, Frank Zanzuccki, Executive Director Authority: N.J.S.A. 5:5-30 Calendar Reference: See Summary below for explanation of exception to calendar requirement. Proposal Number: PRN Submit written comments by May 19, 2006 to: Gregory Copsetta, Assistant Director New Jersey Racing Commission P.O. Box 088, 140 East Front Street Trenton, New Jersey The agency proposal follows: Summary The New Jersey Racing Commission (Racing Commission) is interested in obtaining public comment regarding the proposed amendment to N.J.A.C. 13: , Elimination of wagering. The proposed amendment would allow New Jersey racetracks, casino simulcasting facilities and the account wagering system to eliminate certain forms of wagering on all interstate simulcasts which are being offered by a sending track association, if there is a written contractual agreement between the New Jersey racetrack and the out-of-state venue (and the request is

2 made before the printing of the race program). The current rule, read in conjunction with N.J.A.C. 13: and 13:74-1.2, provides that New Jersey racetracks, casino simulcasting facilities and the account wagering system must take all wagering pools offered by an interstate simulcasting sending facility unless said wager is disallowed by New Jersey statute or rule. The show wager, which is won by selecting a horse to finish first, second or third, and the place wager, which is won by selecting the first or second finishers, are the two wagering pools this amendment would primarily address. The proposed amendment includes language changes to reflect that the rule applies to casino simulcast facilities and the account wagering system, in addition to New Jersey racetracks. The New Jersey Sports & Exposition Authority has sustained substantial losses in minus pools in previous years due to out-of-state racetracks offering show and place wagering in races that have short fields (five or six participants) and, in addition, an outstanding horse as one of the participants. This scenario encourages large bettors to wager into show and place pools often resulting in minus pool situations. A minus pool results when the racetrack, which must by law return a minimum of $2.10 on a $2.00 wager, is required to supplement the payoff because there is insufficient money in the net pari-mutuel pools, due to the amount of winning dollars wagered. The racetrack, casino simulcasting facility and account wagering system accepting a simulcast race where the minus pool occurs is responsible for its supplemental offset. Not providing permitholders and casino

3 simulcasting facilities discretion to eliminate the pools or wagers which cause this type of situation makes for a non-profitable proposition, but actually costs New Jersey racetracks, casino simulcasting facilities and the account wagering system money to sustain these simulcast tracks, which are an essential part of the everyday wagering menu. The proposed amendment would give New Jersey outlets which offer such pari-mutuel betting the ability to continue to take these simulcast venues in a more profitable atmosphere by not having to incur lost revenues solely due to large wagerer frequenting their facilities. The ability to eliminate wagering pools, consistent with the proposed amendment would also eliminate an unfair advantage by an out-of-state track who does not share in the loss when these bettors win. The Racing Commission is providing a 60-day comment period for the proposal. Therefore, this proposal is exempt from the rulemaking calendar requirement in accordance with N.J.A.C. 1:30-3.3(a)5. Social Impact The social impact of the proposed amendment will be positive. By allowing the discretionary elimination of certain pools, a large wagerer would be precluded from forcing place and show pools to a payoff of the minimum $2.10. Since most mutuel managers know these large wagerers and the scenarios of out-of-state races which would induce these bettors to force the payoff prices down, allowing the elimination of certain pools at the venues where these bettors are located would result in the remaining venues allowing their patrons to wager on said pools and realize a higher mutuel payoff.

4 Economic Impact The proposed amendment will likely have a positive economic impact on New Jersey racetracks simulcast facilities, casino simulcasting facilities and the account wagering system. Current rules mandate New Jersey wagering venues take all wagering pools offered by out-of-state sending tracks even if the result will not be profitable because of few participants in a race and even where an outstanding horse is present. Some out-of-state tracks are reluctant to eliminate place and show pools because they know most large bettors do not frequent their tracks and they do not share in minus pool supplemental liability responsibilities. Large wagerers do frequent New Jersey racetracks and casinos, and participate in account wagering, and sometimes choose races where short fields and outstanding horses exist mostly from these smaller out-of-state tracks who refuse to eliminate pools which cost New Jersey venues large amounts of money to sustain. The proposed amendment would allow New Jersey simulcast outlets at their discretion to eliminate what they deem to be unprofitable wagering pools even if the host track offers them, thus cutting losses, which in the case of the New Jersey Sports & Exposition Authority, which operates the Meadowlands Racetrack, Monmouth Park and account wagering system can be as high as $300,000 to $500,000 per year. The implementation of this proposed amendment will have a negative economic impact on those horse bettors who place the type of bets to which the amendment is directed. This is because they would no longer be able to place such bets, assuming the New Jersey outlet in question eliminates the bet.

5 However, these types of wagers negatively impact the racetrack operators and casino simulcasting facilities as well as the vast majority of bettors. Federal Standard Statement A Federal standard s analysis is not required because the rules of racing are dictated by State statute N.J.S.A. 5:5-22 et seq. and are not subject to any Federal requirements or standards. Jobs Impact The proposed amendment will not result in the generation or loss of jobs. Agriculture Industry Impact The proposed amendment will have no impact on the agriculture industry in the State. Regulatory Flexibility Statement The proposed amendment will impose no reporting, recordkeeping or compliance requirements on small businesses as defined in the Regulatory Flexibility Act, N.J.S.A. 52:14B-16 et seq. The racetrack associations and casino simulcasting facilities affected by the amendment are not small businesses, as each employs more than 100 people full-time. This is a protective amendment for the racetracks in New Jersey which will not increase or decrease small business involvement in the horse racing industry.

6 Smart Growth Impact The proposed amendment will have no impact on the achievement of smart growth or the implementation of the Sate Development and Redevelopment Plan as defined under Executive Order No. 4 (2002). Full text of the proposal follows (additions indicated in boldface thus; deletions indicated in brackets [thus]): 13: Elimination of wagering (a) -(b) (c) (No change.) New Jersey [race tracks] racetracks, casino simulcast facilities and the account wagering system may adjust the pari-mutuel pools to eliminate certain forms of wagering on all interstate simulcasts consistent with the parimutuel decisions made by the sending track associations in conformance with that state s rules and regulations. Notice of the decision to make adjustments shall be provided to the Racing Commission or its designee prior to accepting wagers on the event. (d) New Jersey racetracks, casino simulcasting facilities and the account wagering system may adjust the pari-mutuel pools to eliminate certain forms of wagering on all interstate simulcasts which are being offered by an interstate simulcast facility provided there is a written contractual agreement between the New Jersey racetrack, casino simulcasting facility or the account wagering system and the out-of-state venue, allowing the elimination of said wagering pool(s). Notice of the decision to eliminate any wagering pool(s) offered by an interstate simulcasting sending facility shall be provided to the Racing Commission or its

7 designee prior to the printing of the program. Once the program is printed, elimination of wagering will only be permitted consistent with (a) and (b) above. [(d)] (e) (No change in text.)