Stuart S. Janney III: A year ago at this conference we talked about the impending debut of sports betting in New Jersey. As many of you know, it has been extremely well-received. In fact, this past May bettors wagered more in New Jersey than in any other state in the country.

Monmouth Park has been right in the middle of this new phenomenon. And Bill Knauf joins us today to share some of what he and his colleagues on the Jersey Shore have learned about their customers in the past year. Thanks a lot.

Bill Knauf: Thank you, Chairman Janney and to Jim Gagliano and The Jockey Club for inviting me here.

I grew up in the Albany/Schenectady area and have spent many summers in the picnic area with a cooler and a blanket for my family. So it's special to come back here.

I've been on the Jersey Shore now 21 years, and the last few years have been pretty exciting and unbelievable.

So today I'm going to give you an overview of the sports operation, how we got there, what our current environment is and where we see moving forward at Monmouth.

Monmouth is an old historic racetrack. It's been around since 1870. Currently, since 2012, it is operated by the New Jersey Thoroughbred Horsemen's Association, which is quite unique in our industry. It's horsemen-operated and focused as a racetrack. We have 61 summer days of racing, about 500,000 summer visitors. We also have two off-track wagering facilities. We have an NJBets system, which is our New Jersey Account Wagering System. We have exchange wagering. We have a sportsbook, obviously, now, and we also even have a restaurant and Bluegrass Mini Golf.

So for sports betting, we go back to 2011. Dennis Drazin and Governor Christie led the fight to get sports betting, and it's been a many-year battle. 2011, in November, the voters in New Jersey passed a referendum. Governor Christie signed it. For the next couple of years it has been quite the court battle that led to 2017, in December, when the Supreme Court heard the case.

They delivered their opinion on May 14th. 6-3 in favor of New Jersey. And we opened our sportsbook on June 14th of 2018. The first thing that we had worked on was a renovation of our facility. We took an old mutuel line, converted that into our current sportsbook. Our partner William Hill had invested into a sports bar four years earlier in preparation for that. And what I would like to play for you now is a video to give you a flavor of what the sportsbook looks like in our facility. And the scenes that you see were filmed during the Men's World Cup in 2018.

(Video played.)

We have seen those reactions at the races as well.

So what is the current environment? There are two racetracks and eight casinos currently open for sports betting.

Monmouth Park, we have us and Meadowlands. Freehold has yet to open. Each permitted retail location is allowed three what they call skins, which are essentially websites to operate online sports wagering. We have — William Hill is one of ours, we have Play SugarHouse, which we licensed, and we have one soon to open, In The Score.

So as you can see here it's a very competitive market online. Not as much in the retail but, obviously, if all 10 permittees are allowed three skins, we could actually have up to 30 operating.

Here's a little snapshot of what Monmouth Park has won. This is January 1st to June 1st. And the difference in sports wagering is as opposed to racing where we, obviously, calculate the gross pari-mutuel handle, in sports betting we count the win, which is the amount of money that we won from the bettors. So our retail is, since January 1 to June 1, $3.1 million; in mobile, it's $7.4. This is the trend that is going through sports betting. Currently, the entire state of New Jersey is actually an 80/20 split. 80 mobile and 20 retail.

So one of the major questions that I get a lot is how does it affect pari-mutuel wagering handle. So, obviously, there are many factors that can affect it, especially our live meet. Our live meet is affected by the type of race, if it's Haskell Day or UN Day, the crowds, the weather, the promotion. So I've tried to take a few instances where could I show you where it directly affected.

The first one is our nighttime simulcast handle. We are open every single day for simulcasting day and night. I took the statistics from January 1 to June 1st and compared our nighttime, which is after 5 o'clock. We are up 16 percent. That is purely because of sports betting. Sports bettors, obviously, come in at night, they watch the games, we put racing on next to those televisions and our video board that you saw, and we have seen an increase in those sports players gravitating to bet some of the nighttime simulcast handle.

The next one is something that we are right in the midst of doing, which is trying to create a player rewards card that is sports and racing. Currently, William Hill has their player rewards card. We have ours for the racetrack. We want to make it easy for those bettors to carry one card and use in both places, thereby promoting the crossover wagering.

The third instance, this is a promotion that was done this year by TVG and 4NJBets. And Fan Duel obviously operates one of the largest sports books in New Jersey, and they did a promotion targeting customers, the sports customers who had never signed up for a New Jersey horse racing account. They gave them an incentive, a hundred, two hundred dollars to bet on Kentucky Derby day. They had an amazing response. They had thousands of people sign up for account wagering, horse account wagering, deposit money, play the Derby. And it led to over a $500,000 handle increase on that day, which is incredibly impressive.

So I'm going to show you some specifics of how we have tried to continue to promote horse and sports wagering crossover. The first instance is 2018, shortly after we opened the sportsbook, on Haskell Day we thought that was a great opportunity and we did a parlay card. Parlay cards are very popular in sports betting. And we did the Haskell and the two stakes races prior to the Haskell, combined with a sports baseball game. So you had to pick correctly all four to win the card.

We also did some fun other wagers that we have the flexibility to do in the sportsbook. We did margin of victory, we did some head-to-head matchups, Good Magic and Bravaso. So all in all for 2018, it went very well and we did about 20,000 in handle.

Fast forward to 2019. We wanted to expand and even have more fun and engage the bettors to bet both sports and horse. So as you can see here this is a snapshot of some of the wagers we had that day. We had matchups again. We also did the parlay card which is not shown here. We had Maximum Security versus Mucho Gusto. But then we really got a little creative in some of the wagers. You can see here we had the Yankees run total for the baseball game that night versus the number of exacta finishes that Paco Lopez was going to finish in. As a note, the Yankees actually scored 11 runs that night, which I don't think Paco was going to get there. Joe Bravo over/under wins for the day. Plus or minus one and a half races. And possibly the most unique one is, the over/under for if you add all of the saddle cloth numbers up that won throughout the entire day, and it was over/under 65 and a half. So you can have a lot of fun with that one.

 So, observations are we have done some research on our customers and our building already, horse and sports and sports has markedly come up with a younger and more diverse audience. They are extremely mobile savvy which I'm sure doesn't surprise anyone but they are very engaged to make bets on their mobile devices. We still believe that retail plays a big part in growing sports just like it does with horses. We have always taken that philosophy, to make a bettor, you bring them out to Monmouth and certainly Saratoga and you'll make a fan. Sports we feel like is a very social atmosphere and it lends itself to that as well.

Fixed odds. The sports gamblers prefer fixed odds. If any of you have ever made a sports bet, when you place your bet, your ticket that you get back says exactly how much you won. It's set. It's fixed. If you want to bet again, you can. The odds will change, but you can bet again and it will show you what you win that time.

The sports customer does not want to see late odds changes, which we, obviously, it's an issue in our industry where a horse goes into a gate at two to one and by the quarter pole he's four to five. The sports customer's not going to understand that, and be deterred by that. We see the combination of fixed odds and horse racing as a potential new revenue stream and we will in the next coming year try to push as much of a fixed odds focus through the sportsbook for horse racing, obviously we will start with our own product and then try to get other jurisdictions through our sportsbook and hopefully open up new revenue streams and engage those bettors. The racetrack obviously has a lot of advantages in terms of legal, regulated gaming on the property, interior space, comfortable environments, but all in all, the last line I have up here is continue to cross promote sports and horse racing. We truly believe in that, we think there is a massive audience out there that bets sports that has never tried to bet horse racing and we want to engage that customer.

At Monmouth Park we're a racetrack first. We are, as I said, horsemen-run and we are never going to change from that, but we would be crazy not to take advantage of what's in front of us with sports customers and hopefully grow our business on both sides. Thank you very much.

Stuart S. Janney III: Thank you very much, Bill, I think there's a lot in what Bill has said that should give us optimism and I hope we're able to, over the next number of years, take advantage of some of the opportunities that Bill has laid out for us.