New Jersey Horsemen Sue Penn, Greenwood for Closing Freehold Raceway

Posted on: October 8, 2024, 10:01h. 

Last updated on: October 8, 2024, 02:24h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

A horse racing association in New Jersey has brought a federal lawsuit against Pennsylvania casino operators Penn Entertainment and Greenwood Gaming and Entertainment, collectively doing business in New Jersey as FR Park Racing, for their decision to close the Freehold Raceway.

New Jersey horsemen Freehold Raceway lawsuit
Freehold Raceway advertises the opening of its Bet Parx Sportsbook in October 2020. The track’s partnered horse racing association is suing the owners of the track after they announced their decision to close the historic facility. (Image: AP)

In September, FR Park announced it would shutter the nation’s oldest horse racetrack at the end of the year. Freehold dates back to the 1830s, with harness racing commencing on the half-mile dirt oval in 1854.

FR officials said “the operations of the racetrack cannot continue under existing conditions” and that the company did “not see a plausible way forward.”

In New Jersey’s federal district court, the Standardbred Breeders and Owners Association of New Jersey (SBOANJ) alleges FR Park’s abrupt decision to close violates its Operations Agreement and sports betting Revenue Sharing Agreement, which were to respectively run through June 2025 and the end of 2029.

Penn and Greenwood acquired Freehold in November 1998 for $57.5 million as a combined entity called Pennwood Inc., which later became FR Park Racing. At the time, both companies were primarily invested in horse racing. They transitioned to gaming after Pennsylvania legalized slot machines at racetracks in 2008.

Seven-Count Complaint 

In its lawsuit naming FR Park Racing as the defendant, SBOANJ levies seven counts of injustice. The plaintiff alleges breach of the operations agreement, anticipatory breach of the operations agreement, breach of the revenue sharing terms, breach of contract, breach of the duty of good faith and fair dealing, and two counts of demand for accounting.

The horsemen wrote in their complaint that the “relationship between a racetrack and its local horsemen group is a critical part of their interdependency — the horsemen provide the racetrack a product to sell and the racetrack provides the horsemen the ability to compete.”

The litigation claims FR Park failed to live up to its side of the deal. The horsemen argue that FR Park’s parent entities purposely didn’t launch sports betting at the Central New Jersey facility after the landmark US Supreme Court ruling in May 2018 that provided the state with the ability to authorize sportsbooks.

Instead of commencing a retail sportsbook at the facility and an online book, which would have required FR Park to share a percentage of its sports betting revenues with the SBOANJ, the casino companies partnered with Atlantic City casinos where they could retain more of their sportsbook money.

The complaint contends bad faith actions by Penn partnering with Resorts for online sports betting privileges and Greenwood with Caesars to launch Bet Parx online. While the owners of FR Park benefited from online sports betting in New Jersey, they didn’t start running a retail sportsbook at the racetrack until September 2020.

FR Park opened a Bet Parx Sportsbook at the raceway, and in December 2021 partnered with PlayUp, an embattled sportsbook operator from Australia that failed to gain any meaningful market share in the US sports betting industry, for its online skin. Among poor handles, FR Park closed its physical and online sportsbooks in August 2024.

The complaint primarily asserts that FR Park Racing breached its contractual obligations to the SBOANJ concerning the general operations of Freehold Raceway as well as the sharing of sports wagering revenues generated through the Raceway,” the horsemen said in announcing the lawsuit.

“FR Park Racing has been evading its responsibilities under an agreement with the SBOANJ to maintain the Raceway, provide a safe condition for patrons and racing participants, and make necessary repairs. FR Park Racing and its sports wagering partner, PlayUp Interactive, also owe the SBOANJ hundreds of thousands of dollars from sports betting as required by a revenue sharing agreement,” the statement continued. 

Monetary Damages Sought

Along with not running a functional sportsbook operation that would have benefited the horsemen, the plaintiffs say FR Park’s decision to close the historic racetrack means the $1.6 million purse subsidiary authorized through legislation signed by Gov. Phil Murphy (D) just weeks ago will be forfeited.

The $1.6 million purse subsidy for subsequent state fiscal years (2026, 2027, 2028, and 2029) will now be forfeited due to the closure of Freehold Raceway, and the horse racers and breeders will lose the opportunity to race for a chance to win this purse money,” the lawsuit read. “Closure of Freehold Raceway will also result in lost jobs.”

The plaintiff is asking the federal court to order FR Racing to improve the track’s conditions and award damages to SBOANJ.