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In re Consider Distribution of the Casino Simulcasting Special Fund in the Amount of $1

January 22, 2008

IN THE MATTER OF: CONSIDER DISTRIBUTION OF THE CASINO SIMULCASTING SPECIAL FUND (ACCUMULATED IN 2005) IN THE AMOUNT OF $1,820,699.42 PURSUANT TO N.J.S.A. 5:12-205D.


On appeal from the New Jersey Racing Commission.

The opinion of the court was delivered by: Grall, J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued October 16, 2007

Before Judges Fuentes, Grall and Chambers.

The New Jersey Thoroughbred Horsemen's Association (THA) appeals from a final order of the New Jersey Racing Commission (NJRC) distributing, pursuant to N.J.S.A. 5:12-205d, $1,820,669.42 that was deposited in the Casino Simulcasting Special Fund (Special Fund) during the year 2005. THA challenges the procedures the NJRC employed in distributing the fund among the competing applicants,*fn1 alleging violations of the "Senator Byron M. Baer Open Public Meetings Act" (OPMA), N.J.S.A. 10:4-6 to -21, the Administrative Procedure Act (APA), N.J.S.A. 52:14B-1 to -25, and due process. We conclude that the NJRC's action was inconsistent with the OPMA, the APA and the principles of administrative due process.

The Special Fund at issue was established by the Casino Simulcasting Act (CSA), N.J.S.A. 5:12-191 to -210. The CSA authorizes casinos in Atlantic City to accept wagers on and receive live transmissions of horse races conducted in this State and other jurisdictions. See N.J.S.A. 5:12-191 to -193. The CSA directs the NJRC to deposit into the Special Fund a specified portion of wagers made at casinos on races sent from racetracks "out-of-State." See N.J.S.A. 5:12-203g (3); N.J.S.A. 5:12-205. The NJRC is responsible for administering the Special Fund and must disburse the entire amount annually. N.J.S.A. 5:12-205. Certain disbursements, which are mandated by subsections a through c of N.J.S.A. 5:12-205, are not at issue here. This dispute centers on the surplus remaining after those mandatory disbursements, which the NJRC must distribute to racetracks and horsemen's organizations in accordance with subsection d of N.J.S.A. 5:12-205. In 2005, a surplus of $1,820,669.42 was available for distribution pursuant to subsection d.

Subsection d provides for distribution of the surplus as follows:

From any amounts remaining after the payments required by subsections a., b. and c. of this section are made, the New Jersey Racing Commission shall compensate, in such amounts as that commission deems appropriate, the following entities in the following order of priority:

(1) any racetrack in this State which can demonstrate to the satisfaction of that commission that its financial well-being has been negatively affected by casino simulcasting;

(2) any racetrack in this State which that commission finds to be financially distressed;

(3) any horsemen's organization which will use the money to fund a project which that commission determines will be beneficial to the racing industry; and

(4) all racetracks located in this State on an equal basis. [N.J.S.A. 5:12-205d.]

It is clear that subsection d allows racetracks and horsemen's organizations to compete for shares of the surplus in the Special Fund. Although the NJRC has broad discretion to set the amount of the awards, it must select the recipients in accordance with the statutory criteria. The NJRC cannot give a racetrack priority over a horsemen's organization unless the racetrack demonstrates that simulcasting has had a negative effect on its financial well-being or that it is "financially distressed." N.J.S.A. 5:12-205d(1)-(2). A horsemen's organization cannot obtain a share of the fund unless it proposes a project that the NJRC concludes "will be beneficial to the racing industry." N.J.S.A. 5:12-205d(3). If the fund is not ...


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