Roanoke Rapids City Council Land-Use Amendment Gets NC Horse Racing Ball Rolling

Key North Carolina figures jockey for the inside track in a unique financial horse race.

Political leaders seek legislation to help government embrace the advent of horse racing in North Carolina. At the same time, business interests vie to run at full stride whenever that happens.

The latest nuance unfolded in Roanoke Rapids when horse racing took a subtle step forward.

City Council approved a land-use amendment in the Carolina Crossroads Music and Entertainment district tied to horse racing and pending state legislation on that matter.

Initial impact of City Council approval

The 3-2 vote reversed an earlier verdict.

Initial impact:

Highlights of the amendment change the former wording of “multi-use outdoor recreation facility” to “multi-use indoor/outdoor recreation facility.”  The new wording impacts not just horse racing but many other enterprises.

The Longer View:

Horse racing is just one element in the overall business-development dynamic in Roanoke Rapids. It might find a home there or simply become the link to something bigger, like a North Carolina casino.

The 48,000 square-foot, 1,500 seat Roanoke Rapids Theater, featuring live entertainment, private suites and concession areas, was sold last August to the Carida Capital Group for $2 million.

Attorney Bill White from  Carida Capital represented the company’s interest in the council meeting that produced this new amendment. Changing from “multi-use outdoor” to “multi-use indoor/outdoor” could presumably accommodate an indoor casino and outdoor race track or training facility. Or it might simply allow an indoor facility, like a casino, if the track could not materialize.

White indicated that several administrative hurdles must be cleared, especially from the North Carolina Lottery, before his company could move forward with plans. But this decision, a reversal from a previous one, at least got local government on board.

This is one small step in a long-term process, which might conclude next year. Or the year after.

Roanoke Rapids decision could entice investors

The amendment keeps both options available for an investor. That’s important because movements like this rarely occur orderly, or in a straight upward arc. There are bursts of momentum and idle periods. During these times,  investors can be lined up and then lost, even replaced by new investors.

It would be great for North Carolina to build its first thoroughbred race track. But the casino business would be far more lucrative than a racing establishment and would be an operator’s first preference.

Examining North Carolina racing implications

When North Carolina legalized sports betting last year, it somehow included a provision that would cripple a horse-racing operator: a $1 million entry fee covering five years.

The market won’t support that expenditure. The fee is also 10 times higher than New York, which has the highest annual fee of $20,000, according to a lottery commission report.

This is an apparent oversight that can be corrected.

Lawmakers will consider changes in state law as soon as possible according to Rep. Jason Saine, R-Lincoln County. He was a chief sponsor of the sports-betting legislation and correctly considers the $1 million entry fee a barrier to a horse-racing operator.

The legislature or the NC Lottery Commission will likely adjust its tax stance to embrace this potential revenue source. The addition of horse racing, after all, was one of the changes required for the North Carolina House and Senate to approve the sports-betting bill last June. It would appear logical that the commission will fine-tune its rules to let horse racing produce tax money for the state.

Some sensible financial consensus will likely produce a realistic entry point for horse-racing operators.

That could originate in several forms, including a horse-racing licensee being able to partner with a sports-betting operator. But it may require legislation, which takes time.

An easy fix

By adding horse racing to the original sports-wagering bill, lawmakers wisely enabled the future contribution of the Sport of Kings. They left the door open for the logistics to be re-visited, which will occur before an investor gets involved.

A standalone race track would become an extreme longshot to sustain itself on racing alone. However, being linked with a casino and/or entertainment complex would produce other revenue streams crucial for small operators.

Casino involvement saved Delaware Park from bankruptcy a few years ago. Monmouth Park in New Jersey, which has high-level racing, including the $1 million Haskell Stakes, needs a state subsidy and an on-site sports-betting partnership with Caesars Sportsbook to stay viable.

Even the big hitters lean on a partner. Gulfstream Park in Florida, home of the $1 million Florida Derby that has produced 25 Kentucky Derby winners, benefits from mobile betting in the Sunshine State.

The importance of being business friendly

Conversely, burdensome tax obligations will kill the product, as evidenced by recent history.

Favorites, a New Jersey simulcast facility in Egg Harbor Twp. with approximately 100 seats, closed its doors last year. Operators said margins were insufficient to meet the state’s $100,000 licensing fee. They indicated that the rise of mobile betting also crushed the simulcast market.

Indeed, at live race tracks, gamblers will bet on their phone to avoid being shut out.

Fabled Golden Gate Fields in Berkeley, California, was shut down by an ownership group that will now streamline its trainers, jockeys, and horses into a Southern California operation. Golden Gate had no casino affiliation to boost its profits.

Final Analysis

Every effort to accommodate more forms of gambling here will likely be made.

The North Carolina Lottery Commission, regulator of all commercial gambling, will eventually want to broaden its market.

A bellwether April produced almost $19 million in tax revenue. That figure slid to just over $11 million in May, and nothing major is on the horizon until the NFL and college seasons in September.

Horse racing runs all year. Although it’s not a substantial revenue source, it is consistent.

It will be interesting to watch the developments for all the power brokers in the next couple of years

And every time a story develops, like the one in Roanoke Rapids this week, we are reminded of the ongoing administrative race.

About the Author

Dave Bontempo

Dave Bontempo, a multiple national award-winning boxing commentator and writer, writes NFL betting columns for the Press of Atlantic City and iGaming Player, among others. He writes significantly about the emerging world of legal New Jersey sports betting.