A defunct horse racetrack in Cherry Hill, New Jersey seeks to revitalize its venue by opening a sportsbook. A Pennsylvania-based ownership group, however, stands in the way. A decision in the resulting lawsuit filed in the Garden State will decide the fate of the track’s future. And it could determine if the ownership group steps into the NJ sports betting industry.
Garden State Park, about 45 minutes east of Philadelphia, has not staged a horse race in 17 years. Thanks to a provision in the New Jersey bill legalizing sports betting in June, though, the track can house a sportsbook.
Yet GS Park Racing (GSPR), owned by Parx Casino ownership group Greenwood Gaming & Entertainment, holds restrictive covenants at the facility. Those covenants prohibit “gaming of any sort … at any time by any party other than (GS Park Racing).”
According to the lawsuit filed Aug. 16, Garden State Park developer Cherry Hill Towne Center Parnters LLC alleges that the track’s owner, Pennwood (a joint venture between Greenwood and Penn National Gaming) is overstepping its bounds. The development firm claims the restrictive covenants, specifically with sports betting, are “invalid and unenforceable.”
Any decision of this lawsuit could result in sports betting at the track. However, who runs it — the New Jersey developer or the Pennsylvania owner — is still up in the air.
Lawsuit centers on location
Garden State Park shut down its racing operations in 2001, two years after GSPR obtained restrictive covenants. At the time, per the lawsuit, sports betting “could not have been contemplated” when the restrictions were developed. Now the Cherry Hill developer desires a ban that “does not prohibit the newly permitted sports wagering” industry.
In June, GSPR attorney Roberto Rivera-Soto wrote a letter to Cherry Hill Towne Center Partners:
“GSPR attaches significant importance and value to the rights it holds under the restrictive covenants.”
The lawsuit claims that GSPR operates outside the racing oval at the facility. Cherry Hill’s sports betting operation would have its sportsbook within the oval, the only place authorized to accept wagers, according to the NJ sports betting bill.
GSPR originally intended to have OTB
Initially, GS Park Racing planned to build an off-track betting parlor at the racetrack. No construction came to fruition, however, mostly because of the track’s proximity Greenwood properties, according to the lawsuit. Parx Casino and its adjacent Parx Racing track are 20 miles away from Garden State Park.
By not acting on the OTB parlor, the lawsuit says, GSPR “waived or abandoned the protections of the declaration as they have failed to develop any off-track wagering facilities on the (Cherry Hill) property.”
“Neither GSPR nor any of its affiliates has any interest in developing an off-track wagering facility at the (former track) or in the vicinity.”
As a result, per the lawsuit, GSPR’s restrictive covenants are flawed as there is no end date. They represent “an unreasonable restraint on trade,” the lawsuit says.
What could result from the lawsuit
Obviously, a ruling in the Cherry Hill developer’s favor would help the group roll out regulated wagering at the racetrack. Should the covenants hold true, however, several scenarios could arise.
Though Greenwood has not publicly commented on extending its brand into New Jersey, it seems logical for the company to not run a sportsbook a short drive from its flagship casino, Parx. Fear of self-cannibalization drives that reasoning. After all, Greenwood last week filed paperwork with the PA Gaming Control Board to offer sports betting at Parx and at the South Philadelphia Turf Club, which sits a mere 10 miles from Garden State Park.
Penn National, however, has expressed its interest in expanding its footprint in the Garden State. The company also owns Freehold Raceway, located about 50 miles to the northeast of Garden State Park.)
In a Wednesday story from Gambling Compliance, a gaming lobbyist who requested anonymity said “I would be surprised if Parx and Penn National don’t open a sportsbook at Cherry Hill.”
The lobbyist later added: “It could be like the Borgata (in Atlantic City) when it was co-owned by MGM (Resorts International) and Boyd Gaming.” In 2016, MGM bought out Boyd’s 50-percent share of Borgata.
Former NJ state senator Ray Lesniak told Gambling Compliance that the Cherry Hill market represents 27 percent of New Jersey’s sports betting market. Lesniak wrote the language that included restrictive covenants on gaming at Garden State Park. He told Gambling Compliance he did so figuring New Jersey would legalize sports betting but not Pennsylvania.
Obviously, PA legalized the industry, though the 36 percent tax rate is a high hurdle to clear. For comparison, New Jersey’s tax rate stands at 8.5 percent.
Two weeks ago, Penn National was the first to submit an application to offer PA sports betting. Operated by William Hill US, Penn National’s Hollywood Casino would house the sportsbook. Penn National Vice President Fred Lipkin said that operation could “begin later this fall upon final approval by the Pennsylvania Gaming Control Board.”
