LOMURRO I DAMSON - Cit-ehillsborough.cit-e.net/documents/otw_app/rac 0006 hillsborough... ·...

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LOMURRO I DAMSON LOMURRO DAMSON EASTMAN &MUNOZ PA. ATTORNEYS AT LAW Michael D. Schottland Certified by the State of New Jersey as a Civil Trial Attorney Direct Dial - (732) 410-2351 March 21, 2013 VIA EMAIL & U.5. MAIL Michael Vukcevich, Deputy Director Division of New Jersey Racing Commission 140 E. Front Street P.O. Box 088 Trenton, NJ 08625-0088 mschottland(a,lomurrolaw. com Reply to Freehold Dept. FaY - (732) 409-0292 ~~~ Q~~ D (~ LIAR 2 4 2014 ~~ RE: New Jersey Thoroughbred Horsemen's Association Application for OTW License -Hillsborough Dear Mr. Vukcevich: I am in receipt of your March 13, 2014 Letter requesting additional information relating to the NJTHA's OTW license application for Hillsborough. Enclosed herein, please find Amended Application Part A, including o A replacement page for page 7 of Application A, referencing that in response to Question 7, Attachment A refers to the attachment annexed to Application B; o Fully notarized execution page; and o A Table of Organization for the New Jersey Sports & Exposition Authority; Petition for License to Operate OTW in Hillsborough, including explanation of participation by other entities that are parties to the Participation Agreement pursuant to Application B, Question 9; Additional Table of Organization for independent contractors of the NJTHA; and NJTHA's Financial Statement for 2013 (under seal). To respond to the attachment envisioned by Question 9, we have included our response in the Petition that accompanies this filing. Reply to. 100 Willow Brook Road, Suite 100, Freehold, New Jersey 07728 (T 732.462.7170 F 732.462.8955 ( lomurrolaw.com 9 Grand Avenue, Building 2, Suite 2A, Toms River, NJ 08753 ~ T 732.505,4411 F 732.505.4606

Transcript of LOMURRO I DAMSON - Cit-ehillsborough.cit-e.net/documents/otw_app/rac 0006 hillsborough... ·...

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LOMURRO I DAMSONLOMURRO DAMSON EASTMAN &MUNOZ PA.

ATTORNEYS AT LAW

Michael D. SchottlandCertified by the State of New Jerseyas a Civil Trial AttorneyDirect Dial - (732) 410-2351

March 21, 2013

VIA EMAIL & U.5. MAILMichael Vukcevich, Deputy DirectorDivision of New Jersey Racing Commission140 E. Front StreetP.O. Box 088Trenton, NJ 08625-0088

mschottland(a,lomurrolaw. comReply to Freehold

Dept. FaY - (732) 409-0292

— ~~~ Q~~D(~ LIAR 2 4 2014~~

RE: New Jersey Thoroughbred Horsemen's AssociationApplication for OTW License -Hillsborough

Dear Mr. Vukcevich:

I am in receipt of your March 13, 2014 Letter requestingadditional information relating to the NJTHA's OTW licenseapplication for Hillsborough. Enclosed herein, please find

• Amended Application Part A, including

o A replacement page for page 7 of Application A,referencing that in response to Question 7, Attachment Arefers to the attachment annexed to Application B;

o Fully notarized execution page; and

o A Table of Organization for the New Jersey Sports &Exposition Authority;

• Petition for License to Operate OTW in Hillsborough, includingexplanation of participation by other entities that are partiesto the Participation Agreement pursuant to Application B,Question 9;

• Additional Table of Organization for independent contractors ofthe NJTHA; and

• NJTHA's Financial Statement for 2013 (under seal).

To respond to the attachment envisioned by Question 9, we haveincluded our response in the Petition that accompanies this filing.

Reply to. 100 Willow Brook Road, Suite 100, Freehold, New Jersey 07728 (T 732.462.7170 F 732.462.8955 ( lomurrolaw.com9 Grand Avenue, Building 2, Suite 2A, Toms River, NJ 08753 ~ T 732.505,4411 F 732.505.4606

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Michael VukcevichDeputy DirectorMarch 21, 2014Page 2

We are filing the Financial Statement for 2013 under seal. The

document contains financial information that is exempt under the

Open Public Records Act pursuant to N.J.S.A. 47:1A-1. We understand

the Commission's position articulated in your March 13, 2014 letter.

I understand that Bill Knauf personally gave you the $2,500application fee on Wednesday, March 19, 2014 at the RacingCommission Meeting.

If you need any additional information, please do not hesitateto contact me.

Respectfully submitted,

-~~'c- `~ ~--__MICHAEL D. SCHOTTLANDCHRISTINA VASSILIOU HARVEY

MDS/CVHEnc.cc: Michael Musto

John ForbesDennis Drazin, Esq.Ralph Marra, Esq.Bill Knauf

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N.J.R.C. L7~7{, C~xVL~'

Llc. Ito.

RGI'Z`. 1i*I0.

5~ t~,c ~~

r~o. __

~I+T~T1Z1-~CK ti~'AGERL'~TGLICENSE

APPLICA'TION(A}

I~rEW JERSEY RACINGCOIvIMIS STON~.o, sow oss

T`RENTC7N, NJ 08625-OQ88bQ9-292~D5~3

i'rT:z~.R.C. IJSE 0~.4'

RCPT. D:1TE OPT:R f-- - t~~_C.F~Z;CT

- ~ —{

'v1~ ~l

The Ne~v Jersey Racxz~g Commissiali (hereinafter• ``Comnnission"), pursuant to N.J.S,A, 5: 5-1~7et secs, ~zio~~~ as the "CQ~ Track azid Account ~~agering Act" (lzerei~lafter "Act"), has t ie fullpo~c~ver fo pzescribe rules, regu~atioris and conditions under urhich an off-track wagering lieez~se isissued in this Sate and to re~roke, suspex3d ox refuse to renew a license if in the o~ niou of theCommission the xe~~c~eation of, suspension of or refusal to renew such. license is zz~ the publicinfierest.

J?t~rsuazzt to the powers vested in it by the Act, t11e Commission has promulgated regulatic~i~sgotiyerning the conduct of of#=frack u~-altering in this State, ~~=hic]~ appear at ;~1.7.A.C. 13:74 et, seq.In accordance with the Act and N.J.A.C. 13:74-2. 1(a), the Commission has prescribed t}~e ~~~ithl3"off-track v~Tagerin~ license application" to be coiupletzd by ~I~e Ne«,~ Jersey Sorts andE~positioz~ A~.Xtl7ority and filed with the Con~t~ussion for each proposed off-track ~~,=a~eringfacilit}=. Upon ~1ie filing of this cai~pleted a~~lication, the Commission shall consider suchapplication pursnai~t to the proeedur~ set fortI~ iii N.J.A.C. 13:74-2.1(g)-(i) i~ the case of aninitial application, and pursuant to the procedure set forth in N.J.A.C. 13:7 4-2.2{g]K(1i} in thecase of a renewal. application,

Any off-track wagering license issu.ec~ to the ~uthorzty shalt specify tl~e effective dates of thelicense, the location of the off track «-altering facility subject of the license, tl~e periods of tineduring the calendar year and the ~laYimum hours of operation during which off track wagering ispermitted at tl~e facility, and such other terns oz' conditions which zna~~ be imposed by theCommission ix~ acco~•dance uriththe A.et and N.J.4.C. 13;74-2. 1(j) or 2,2{g), as appropriate_.

Pursuaart to the Act, the undersigned. Ne«~ Jersey Sports and Exposition Flutlzority (hereinafter"Autllc~rity" ox "Applicant"}; as created by section 4 of P.L. 1971, c. 1 ~7 (C5:10-4), herebymakes application for art off-track t~ragering license, as desig7lated imzllediatel}~ below, tc~ the~oinnZissiol~:

( _X~ I~Iifial Application, ̀ ~rhich applicatioia is accon~pai~izd by a non- zefi~ndablefiling fee of $2,540. jsee N.J.A.C. I3:74.-2.1(a}~.

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jType text

Tip making this application, the Authorit~~ acknowledges that if is required fa provide f~11 aa~dcomplete ansuTers. anc~ disclosuxes to all questions asked; and that an~y~ license granted to it b~ theCan~znission is predicated upon the accuracy and coi~zpleteness of the information provided inthis application.

If tl?e space allotted within this application is isot stifficier3t to provide an accurate and completeat~s~xrer, or where tl~e submisszon of an attaclunent zs specifically= requi~•ed, the applicant slial.Iattach such additional pagzs as are necessar~T and complete the response ther~eupox~. '4Vllere theapplicant elects fo fi~rnish an at~acl~rnenf to this applieatioil in response to any question, theapplicant sha11 insert the phrase "see attached" ziz the ansz~~er space on this application fon~. Inall cases, the. applicant s11a1~ label the attachment page vvitli the corzesponding c~uestio~ ~xunit~eri~~ithir~ this ap~lcatioi~.

1) Set forth the location and full address of the proposed off track u~a~erin facility?

S'ee Application B for the Zacativn and full address of t~1e propc~se~' off-hack Ala e~ y'Tlaa

Pursuant to .tlze "partic~atian crgr~eenter7l, " a copy c f ~t~Izicli is attacTred to this~1pplicntiora in res~of7se to Question 7, the application (the 1lTJSEA), upon isstfc~f~ceOf an_y lzcejase subject to this ap~Xicatiolz a~zd sztl~ject to Racing Cotn~~~issio~z approval,ixztends tb inzrnediatelj~ trar~sfej~ the Zicense ar~d ctfly f•igl~ts and obliga~ioizs i~r~czden~tlze~•eto to Ne~~- .Iersey 7'lzorvughbred Horse~rzer7.'s 4ssociration (I~ereinaftet~ "1\TJTHA.').~cco~•dirigly, the NJSE~4 doesriot zntetzd to operate an off-track: tivaRerira~,fac8lit_y pu~sz~afzt to cony license issated to itas ct result of this applzcation. Irz th.e event the Raci~~g Conzn~issia~z does nit approvethe transfet~ of license subject of this applzcali~n to IYTJ7'H~ c~rzd i~z recogi~itron Xl~at theN,TSE~ does ~zot ir~tey2d to establish o~- opel•ate ~tr~ off-t~•ack ti~~e~•irz~; facility ~zrrstrurxtto cnty license isszted pursuant to this crpplieation, tl~e 11jJS'~A f~epreset~ts fl2czt it shallsurretzder ilze issued lice~zse to the Racing Cciz~rnzissiorz tivith Rio ~rejudree to the N,7SEAas t~ arry,futtn^e off track ~vaget•irrg applications ma~'e by it.

since N.IT.FL4 is ir~~erzdecl to ultit~rateZy Iaold t11e license subject to Ilzis c~pplica'tio~~, thespeezfic c~etarls eoncer7~z~~~ floe 3rrarrage»1ent structure, Zocati.on of rl~c~ proposed ofd~t~ack tiva~e~~zr~g fcicility czr2d cornpT-ia~zce ~a~itlz related i~eg~ztlato~~~ f~equirentents are i~jitl~itztJse krtox~ledge of1~TJTHA. Pzsrszeant to the c~p~licutian process, N.ISEA ur~detslcnxdsthat NJTK4 Izczs also heen required to, ftle with tl~e Rucirt~ Cof~a~~~issiona Tice7ise application (I~e~•eisrafter "~pplic~ti~ta 13') rr1 order Ire address these J~elcrt~dn~atterr, Accorc~ir~gl}~, through this cr~plicatiort, the :V.T~SE4 ~rlakes refe~•ence toApplaccttion 13 of I~'JTHr~. iT7~ile the 1~;JSEA I7us exea•cised e~ue dilige»ce

__—..._.responsibilities Tv111s re~arc~s to its husilaess deali~2~ ~vill~ 11:I~TI~A ar relcrt~d to thisnzatder, c~~zd tncorpat~crles ce~~tain i~7fvr•~ttatiora ~~>itla ~lp~licatiora B rn^e ~a~rtl~ir~ tlt~exclusive k~zo~nZedge gfA~JTHA. Hoiveuer, t1~e NJ~S'E_~ lzas lto infvrmatiorr to belieljethat arty of tl2e irzfarl~~~atzan disclosed M~i'tliin 12~plicatio~713 is uaacc~trcr~e.

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[~'ype tExt]

a. Identify the County within ~~lxich the proposed. off track wagering facility urill b~located?

See A~t~licatio~t B

b. Xd~ntify the local municipality in ~~rhicl~ tale proposed off-track wa~erin~ facility is tobe sited?

~'ee Applrcatio~i B

c. Is the proposed off-#rack Wagering facility to be sited in air area zozied r~sidei3tial[see N.S.A.C. 13:74-2,1(h}~j?

Yes NoSee Applicntiora B

cl. Has the applicant st~bzx~itted its plans for the proposed o~'f-track wagering facility tothe appropz~iate municipal plaimiug board and carz~pli,ed wX~ the provisions of section22 of P.X.. I975 e. 291 (N.J.S.A. 40;55D-31) [see N.J.A.C. 13:7-2.1(h}~]?

Yes [email protected]~'JILCQt1011 B

Tf yes, in com~ection with the proposed oft~firack tva~~ring facility at~d / or its plazls,has the municipal panning boazd as of fihe date of the application expressed anyconcerns to t11e applicant v~ThiG1~ remain outstanding cr ui~resalved [see N.J.A.G.

Yes lv oSee Applicafiorz B

If }'es, identify the specific concerzas and what efforts the ap~iicant has taken, ~rintel~ds to take, to xesol~~e the eoiaceri~s expressed by flee illunicipal planning hoard[sea Iti7.J.A,C.13:74-2.1(h)b]?

SeeApplic~ztron B

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~~YP~ text]

e. ~Ias the goi=erning body of tie-local municipality ti~ithin which the proposed off-trackwagering facility is to be sited issued a resolution disapp~~ovinb the proposed off trackWagering facility [see N.J,A.C. ].3:7~--2.1(b)4]?

Yes I~~oSee ~pplicafr"-on 13

f. Has tl~e go~~er~~i~zg body of the local municipality witlli~ ~=hic]i the proposed off-trackwagering facility is to be sited issued airy and a1~ appz~oval~ necessary to be issued byit?

Yes NoSee Appricr~tzon ~3

g. ire any additional goverru~ientaJ appro~Tats, aside fi•ozn the approval of tl~e Raciz~zgCommission, zlecessary for the off-track wagering facility to be situated at suchlocation`?

Yep IntoSee A~,~licatiorz ,B

If }'es, explaial the mature of those requixed gove~xlmental approtiTals ti~~ith regard to theproposed o~:F track ~~vagering facility acid ~~Th~ther or not each leas bea~~ accozi~zplished?

See App(icafior~ B

2) Set forth the fiill ai3d proper• i~arne of the applicant?

Neu Jersey Sports and Exposition. Aut~orit~

3) Set forth the principal address o~tl~e a~pl cat~t7

SU State Route 120, East Rutherford, NJ 07073

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[Type text]

4) Set forth the principal telephone number of the applicant?

11935-8500

5) Provide the name, address and telephone number of the natural person who is authorizedto accept service of process on behalf of the applicant?

Ralph MarraNew Jersey Sports and Exposition Authority50 State Route 120East Rutherford, NJ 07073

(201) 935-8500

6) Is the Authority in compliance with the minimum live race date prerequisites of the Act,as required by N.J.A.C. 13:74-2.1(b)1 or 13:74-2.2(d)1?

Yes X No

7) Attach to this application a copy of a fully executed participation agreement which theAuthority has entered into with all parties (or successors in interest) that held a valid racepermit in 2000 consisting of an aggregate 40 live dates, as required by N.J.A.C. 13:74-2.1(b)2 or 13:74-2.2(d)2. Is such participation agreement attached?

Yes X NoSee attached Ex/zibztA (Sane Exhibzts fromApplzcation B)

If yes, please answer the following additional question:

a. List the parties to the participation agreement (with the exception of the Authority),the principal address of each, and the principal telephone number of each?

Freehold Raceway Off-Track, LLC New Meadowlands Racetrack, LLCc/o Freehold Raceway P.O. Box 7487 _Routes 9 & 33 50 State Route 120Freehold, NJ 07728 East Rutherford, NJ 07073(732) 462-3800 (201) 460-4025

ACRA Turf Club LLC NJ Thoroughbred Horsemen's Assoc.c/o Atlantic City Race Course 232A Norwood Avenue4501 Black Horse Pike West Long Branch, NJ 07764Mays Landing, NJ 08330 (732) 542-8880(6091641-2190

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I~`Yp~ text]

~) I'xovide the na~ue, address and telepl~oz~e number of the natural pexson i~~ha is autk~oz7zedto accept service of process on I~ehalf of each patty to the partici~afiion agreezx~ezlt (z~Tithfhe ~xcep~ox~ of the Authority)?

Hot~~ard Bnulo, Freehold Raceway Off-Track, LLCcfo Freehold RacewayRoutes 9 & 33Freehold, N1 077? S(7~2) 4623800

Maureen Gallagher Bugcion, ~.CR~ Turf Club LLCclo Atlantic Czty Race Course45Q1 Black Horse dike

Mays Landings NJ 0$330(G09) 641-2190

Jeff Dural1~Te« S~~eado«~lazids Racetrack, LLCP.O. Bax 748750 State Route 120Bast Ru€herford, NJ 07073(201) 4604025

Jahn ForbesNJ Thoroughbred Horsemen's Assoc.232A Norwood AvenueWest Lo71g Branch, NT 07764(732}542-8880

9~ ~~Titl7out incozporatan~ the partici~atiozl agreeli~ent by referell.ce il~ your es~onse, attachazl ~~dezidtltzi to this a~plicatit~n explaining tl~e Authority's participatory role in tl~eproposed off-track ~~,~agering facilityr ani~ the participatory role of persons ot]I.er than theAuthority i.zi the proposed off=track wager-ii~g facility. Is 5uc1z ail addenduiil attached`?

Yes X NoSee altriclretl At~c~eridirr~z .B

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[Type text]

l0) Attacks an addendum to this applicatzan, puYsttant tQ the requirements of N~J.A.C. 13:742,1(c), consistzz~g o~ t1~e physical plan a~ tb.e proposed. aff-track u~age~~i7ib facilzty and adescription izlcluding:

— the space xelationship between V~'agez`iz~ and non-t~ag~ring related amenities;— the nuz3lbex of jobs expected to be created at the proposed facility;— tale gross revenues expected to be gene~~ated by the facilit~7;— the fire evacuation plaza fox the proposed facility;.

tlxe t~~pe of food a~~d beverages to be available;— if alcallolic beverages are to be sez~%ed at the facilit~~, ~~rhetlzex the requzrements of

the Act have been s~tisf ed; azzd— fihe proposed hours of opez•ation of the aff track facility.

See ~~plica~ia~T B

I~ t~iis application is a renei~al applicatio~z, and none of the ans~~ers .I~aa~e changed fromyour subzi~.issron last year, you n~aj~ set foz-t1~ in the addendum that this ixifoz-~~7atiai~ is"on file" with the Racing Corz~znissioi~..

Is such an addendum attacl~~d'?

~'es No XTlirs is not a retr.eavc~l applict~tio~a

a. Does t1~e off-track wagering facility- phg~sical plan iaaclude ~rovi.sio~ls for theizastallatioil of security a~ld surveillance egt2i~rnent in public and nonpublic areas ofthe facility [#o include closed circ~irt telec~ision] to ezlhance safety and the integrity ofwagez-ing [see N. T.A.C. 13:74-6.1 {a)4~?

Yes I~TaSL2 Aj3~lIlC(X~1QTI B

If yes, is the physical playa consistezlt ~~jith a1lal~ing the Racing Camr7lissionaccess to tl~e system oz its sig~~al to the sa~~~ eatezlt as fhe employees of theproposed off.-track ~~~agering facility [sea N T.A.C. 13:74-6.1(a)~]?

1'es NoSee A~rplicadiort B

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[Type text]

b. Does the off-track tiNagering facility physical plan include the estal~lislun~nt of a"~~oney zoom" tivi~hin tY~e premises of the facility as coziteznplafed by N.J.A.C. 13:74-6.1.1(a} and (d)?

Yes No.See Ap~lictr.~iarz .B

11) Attach as ail addeladu~~7 to thus applzc~tion a copy of Authority's i~~.tez~zial cor7trolprocedures rebarding the_ proposed off-track ~Ta~ering facility; as required b~ N.J.A.C,13:74-2.1(d) and 13;7A~-2.2(e). Is such an aclden.dur~~ attached?

Yes NoSee AppZicr~tiQrt B

If yes, z~adicate «Iliether fihe infernal control procedures include the follo~~~ing:

a. Procedures to be impl~n~ented to ef~ecti~crely operate and niaxiage the proposed off-track wagering facility [see I~7.J.A.C.13:74-2.1(d)]?

Yzs NoSee Applicatiol~ :8

b. Procedures to be z~nplen~~lzted to effe~tit,ely naaaiatain the integrity of Wabering andthe proceeds frox~1 ~vageri~g associated ~~£ith tl~e ofd track ~~~agering facility [see

Yes ItoSee Ap~~Cicalion B

c. ~1 procedure to f~stex and insure that the aff-track t~agering lice~isee complies withthe requiret~er~t of tl~z Act creating a right of first refusal as to certain individuals ~oz-certain en~plo5~ment opportiulities associated i~Titlz the off-track ~7ageri~7g faeilif}~ [seeN.J.A.C. 13:74-2.1(d}~?

Ye.s No~S'ee Applier~trora B

d. A procedure designed to accurately account for and track proceeds fi-on~ Waeeriilgfroze the time t~~e related V~~a~er is paced through delivery to the money rc~oz~~ andultiz~ate distxzbuxionthere frozx~ [seeN.J.f~.C. 13;74-G,11(a)].See A~~licafiorz B

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I~YPe text)

12) Has the Authority entered into a contract ar agreement to assign ar transfer any off-track~~~ageri2~g license, ~~1~ ch znay lea issued to the Authority by tl~e Racing Com~z~ission as aresult of the within application, to a successoz in interest?

Y;,s X No~'t~r~it~r3zf to f1~e Pc~r~fr'efpatiort Agree~rzertt

Tf SFes, answer the following additzonal question:

a, As part of phis application, is the Authority- seeking the zegulatory approvals required.by I~T.J.A.C. 13:7'4-4.1 as a condition precedent to such assiglul~ent or transfer?

Yes X I~ro

1~) Does t~~e Authority inte~~d to enter into a contract oz' agreeznant ivit~~ a persozi or entity tocoiYduct or operate the- off-track waberii7g facility for it, az~d / or for such person or entityto act as its agent in off track ̀ ~vagering matters a~pz•oved by the Commission, as set forthi7i N.l',A.C.13:7~-4.2?

Yes ~'~lo XTIr,~ Arrtlior~itjJ, as ex~lai~zecl move ira Questioar. 12, r'7ats~zrls to t~~ansfer this lr.c~rtse arzrZal's of its rigl~fs c~ntX obligation i~a.citlelzt fl'tereto, rrport sscca.rr.ce fo N.~T.I~A,

If yes, ans~uex the foiIawing additional giaestior~:

a. As part of this application, is the Authorit~T seeking the zeg~ilatory approvals requiredby N.J.f1.C. 13:7 --4.2 as a conditio~~ precedent to ez~teiiilg into such a ti~=z•itten contractor written. agreeme~~t?

Yes No X

14) Idez~tzfy the proposed locatio~i (co~~~plete a~ltiz•ess) of tl~.e hub facility t~Jit.lain this State,whzch facility shall service ttie off-track wagering facility, as required by N.J.A.C. 18:74-1.1?

See A~plicatiori .8

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I~Y4~~ textl

a. Is this the same hub facility being utilized in connection t~itll accou~~t ~uagerin seeN.J,A.C. 13:7-S.l (b)].

Yes No I~fot applicable as noacco~z~t ~~~agerznglice~lse has beeziissued as of tie dateof thus a~~plicatioz~.

See Applicc~tiora B

I~~~o, is the applicant as part of this application seekin.~ Racing Comn~issiorl ~ppro~al t~ utilize ahub facility diffexetzt froze that being utilized iil coimection with accour7t wagering [see N.J.~.C.

Yes NoS'ee Applic~tiott 13

b. ~s the daub facility p~•o~ased to be utilized by' the off-tr~ac~ wagez-i~~g facility subjecfi ofthis application being utilized by each other off-track wagering faclit}r presantl~jLicensed in Phis State?

Yes ~ No I~Fo~t applicaUle as noaccount z~-a;eriizglicense has beenissued as of tl~e dateof this application.

See appliccrfiorr B

15} Zdentif5~ the fo~lnwJing infonzlation concezning tl~e proposed vendor of the hub facility, asde~uled in N.r .A.C. 13;74-~.i, ~~hich facility is to be utilized zn conn.ectioli wi~l~ fheproposed off-track wagering facility?

~enc~o~ Iti ame:

Principal Address:

Principal T~lepho~e Num.bez:Sep Applr.cation..8

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I~YPe text]

2b) Has the Authority entered into a mitten contract ar a~reemer~t with the ~reildor, asdescribed in the response to qu.estioia 15 to this application, i~~ cozulection ~~7th the 3~ubfacility #o be utilized in connection ti~~ith tine proposed off tracl~ wagezing facilit}~ subjectof this appIicatiori?

Z'es No XTl~.e Atcthorit~>, as explained rcbove, intera~ls ~a trarxsfef~ this Zr'cerise attrl rill of ifs~i,;lits aricl ohlrbcrfio~~ ir~cide~zf tlier~eto, uporx i~sazttrrce to 117TTH~1.

If fires, attach a copy of #lie vnitter~ c~ntraet ax agreement: Is such copy attached?

Yes No X

17) Does the applicant intend t~ de~Tise an identification tag to be zNor~~ by its enl~loyees atthe premises of the off-track ~~~agering facility [see N.J.A.C.13:74~5.'7]?

Yes NoS'ee Applicrctiort B

Tf yes, as pa~~ of this application, is the applicant seek ~.~ appro~~al of the particularidei7tifieation tag format to be utilized, as required b}~ N.J.A_C. 13:74-5.7?

Yes I~ToSee Applict~tio~i B

18) Provide tl~e fflllo~~~ing information concernii~~ the priu~ary banl: utilized b~~ the applicant(name, address, telephone nttnzber} in c~ormectic~n with ids proposed off-track «agerin~facilit~T.

See Applzccztrorz B

19) ~Ias the Authority entez~ed into any financing arra~7gei~~ezlt with any ba~1k, financialinstit~rtion, individual or third ~ari~T to pravzde funding to b~ used in coi~t~ection «=itl~ theoff-track ~~agerin~ facility sut~ject cif this application?

Yes Na X

If yes, id.ez-~tify the parties' sut-sject of the ~izlanci~lg anan~einent and the detailsconcerning the financing`?

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[~"ype text]

20) Attach a "Table of ~rgan.ization" setting forth ~Tit1~ speciticit5~:

a. the identity of fhe applicant and its constituency (e.g., in the case a~ a corporation, theBoard of Directo~•s; Officers, etc.];

t~. the identity a~~d coiastitue~lcy of eac11 entity jincluding but not limited to theapplicant}, affiliate or agent of the app~icaxlt z~hich ~~ill Katie au}~ management,administrative and/or aversi~llt responsibility uritlz respect to a~ly aspect of tl~e o~t-frack wageria~g facility; and the identity of each enl~~loyee ar perso7z ~~~ha ~n~ill l~a~jeany zr~an.agesial, administrative or oversight responsibility on behalf of eacJa identifiedemit}T; affiliate or agent.

Is such a "Table of Organization" attac~ied?

Yes ~ NoS`ee aitcrchetl "Table of Drgarzizafzoxt"

c. for tl~e applzcaxlt ancl. each zr~tity, af'~liate oz agent identified. in tl~e "Table ofOrga~~izatio~~~' attached to this application in zesponse to questions 20 a) and b), attacha "Table [or Tables} Qf Ov~~izership" identi.~~ing ail~r ~a7•ent cozporation{s}, parententities (partnerships, efc.}, or per`soii(s) which holds any ov~~~erslup intez~est i~ saidapplicant, entitST or agent. This question should lie a~zswerecl in a fasllioi~ so that theRacing Cozninission zs fully appzi,sed of all direct and i~ldirecf owners (exc:.ept that,where a publicly traded corporation, holders of Iess than a 5°lo interest need not bedisclosed) of the applicant, as ti~~ell as i~ith respect to any enti#y, affiIzate or agent ofthe .applicant which will have any mana~emezlt, administrative or o~Jersightrespoizsibility t~itll regard to the off-track ~~agerillg facility subject of this ap~~licatioz~.

Is such a table (oz tat~les) attached?

Yes , a table for each entity, affiliate oz a~ez~t is attached.

Yes , a table for one ar more (but not all) ez~lities, affiliates or anents is attached.

~~o ~ , nc~ tables are attached.

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[Type text

If the ansiuer to question 20 c) is "yes, a tabJ.e fox one or more [but not all} entities,affiliates or agents is attached," or "axo, no tables are attached," list each entit~z belaz~ forwhich such table is not attached and provide an explazlation vrh~~ that respective tat~le isnat attached;See Applicr~tiar~ B. 3'l~-e Az~tlrorit~1, ors ~plaif~ec~ above, irrte~zds to 1r~{cn~, fer this l%c~zcse

nrid all rights grad o~iligntror~ ~icidetat tlaereta, upn~2 i~ssuarzce ~01VJ~`HA.

21)To fl1e applicants knowledge, has airy entzt3~ or person disclosed iiz completing thisapplication zver been convicted of an.y crime

Yes No X

If yes, provide the particulars?

22) To fhe applicants kno~~ledg~, leas any entity or person disclosed in completing thisapplicata.gn even ~eez~ suspended, denied a licezlse or ruled off Ly this or any atller RacingCan~missioz~ ox turf governing body?

Yes No X

If yes, give particulars?

L3)Tu the applicant's ki~o~~=ledge; is airy e~lti#y or person disclosed in completing thisapplication presexztly the subject of azly pending c~~iminul investigatio~x, erinlinaleo~z~plaizlt, criminal charges or criminal indictment?

Yes No X

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L~Ype text]

If yes, give pa~-ticula~•s?

24} To the applicant's knowledge, is a~iy entity oi• person disclosed in completing thisapplication presently subject of any civil pz•oceedizl~ where tie patentxal liability ri~ayexceed $10,00Q?

Yes No X

If yes, give pa~-tzculars?

Na NJSEA entity or N3SEA perso~z disclosed izi completing this application to thea~plicaut's Ia~owledge is }presently the subject of aiiy cii~il proceeding ~vliere thePotential liabilzty ~iiav exceed $1x,004.

25) To the applica7~t's Iciloti~~ledge; is aF~y entity cif persozl disclosed in coinpletin~ thzsapplication the subject of any pending investigation or pe~ldin~ complai~lt by any federalor state regulatory t~ody?

~'es I~To X

If yes, give ~articulaa~s?

`fib) Idenfiify bela~u tine name a~~d einployznent position of the individual who lead t~~e pri.mar3Jresponsibility an tiehal~' of the ~lutkzority to cc~nlplete this applzcatioXi?

Ralph Marra— Sr. Vice President Legat I~TJSEA

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[ryE~~ text

27} Icie~tit~~~v~ ~e1c~~v ti~» ~~an~e ar~d ~:rra~lat=r~-~~~~t ~~~sttion c~~'thc high r~an~~~~•ial agent ~~~o tinbe~3al1' i~f.' kl~e ~l~~t~zar~ii~• a~~d ii7 tl~~ si~;z~atur~- s~~s~~ L~elo~c~~, is ati~~.stiz~ t~1~~~ tI~c c~i~clas~irt st~~itl~irz tlazs ap~`~li~:~~.tit?~~ arc t~ tl~e lest of 1~rs ~~- hea~ k.c~~~a~[~dgc ax~~ tx'L~t, acctt.~-a#.~: a~l~i~.c~ii7~~lete., ~s re:c~uired i7ti I~_J.:~.C_ ~3:'7~-3.1.(ej.

1h~i1~~1Z ~~1•~irt~a fir. 'Mice President I.,e~~il '~I1 ~1~=t1

I, being cli~l~r authc~~~ir,~cl tt~ e~ec~7te this a:~~~-slicatio71 tin ~~~.half cif 2f-~~ ~t~~lzc~riiv'. certify t~~r~T t17~~a~tit~~-er~ ~xr~c] cl~ticlt~s~~ir~s •~-itliii~ tl~i~ ~i~?~lic~itac3r~ an~i i.t~ z~tt~chzncrrt~ tc~ tl~~: test cif 7r~y k7~~~r~,1ed~~~ctlY'~ ft'L1~1 1CClI1'~7Y2 i#I74~ CC}il~~~~C?~ ....--~`;-"'.y-~✓_~~

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PETITION FOR LICENSE TO OPERATE OTW IN HILLSBOROUGH

The New Jersey Thoroughbred I~orsemen's Association, Inc. hereby petitions theNew Jersey Racing Commission for a license pursuant to establish an OTW inHillsboroubh, New Jersey. Pursuant to the Participation Agreement, the NJTHA'sagreement with NJSEA, and N.J.S.A. 5:5-130, the NJTHA has obtained the- right to applyfor a license to establish four, new OTWs in this State (one of which was traded in for thePilot Program). The NJTHA is a lessee of New Jersey Sports and Exposition Authority andhereby makes its license application to establish an OTW in Hillsborough, New Jersey atFavorites at Hillsborough, 150 Route 206, formerly Maestro's Restaurant.

ORGANIZATION

The NJTHA is the lessee of Monmouth Park and the permit-holder forthoroughbred racing at the Meadowlands, as well as the permit-holder for WoodbridgeOTW. The NJTHA has contracted with Darby Development, LLC. Darby runs the day-to-day management at Monmouth Park, the Meadowlands, and Woodbridge OTW. If thislicense is approved, Darby will also run the day-to-day management at Favorites ofHillsborough through a downstream entity Favorites at Hillsboro, LLC. Darby is themanaging member of Favorites of Hillsboro, LLC. The NJTHA exercises ultimate controlover all decisions and policy matters. Robert Kulina is the President of Darby. BrianDrazin and Ronald Drazin are the managing members of Darby. Darby owns the propertyat 150 Route 206.

In order to run the OTW, a liquor license is needed. Monmouth Park Spirits, LLCowns the liquor license. Darby is the managing member of Monmouth Park Sprits. Thefood and beverage business will be managed by McLoone's Hillsborough Limited LiabilityCompany. Tim McLoone is McLoone's Hillsborough Limited Liability Company's solemember.

Darby has also entered into an agreement with Sportech Racing, LLC ("Sportech")to provide the terminals necessary for the OTWs. Sportech is the vendor of the Hubfacility in Woodbridge, and will continue to provide its services for Favorites atHillsborough.

The NJTHA has also contracted with Elite Consulting, LLC. Elite providesconsulting services to the NJTHA to develop and expand thoroughbred racing in NewJersey. Elite will continue to be involved in expanding the OTWs to serve the Legislature'spurpose for utilizing revenues from OTWs to supplement horse purses. Elite's managingmember is Dennis Drazin, Esq. Elite will not be involved in the operation of Favorites atHillsborough, but will continue to offer advice and guidance to expand the OTWs pursuantto the NJTHA's statutory and contractual rights.

1

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The NJTHA is a party to the Master Off Track Wagering Participation Agreementthrough a joinder agreement entitled "Transfer of Rights and Assumption of Obligationsunder Participation Agreement" executed on March 27, 2012. The other parties to thisParticipation Agreement are: New Meadowlands Racetrack, LLC ("NMR"), the NewJersey Sports and Exposition Authority ("NJSEA"), Freehold Off Track Racing, LLC("FROT"), and ACRA Turf Club, LLC ("ACRA.").

None of these other entities are involved in Favorites at Hillsborough. However, theparties to the Participation Agreement have certain statutory and contractual rights toincome from bets placed at the OTW. The NJTHA will operate the Favorites atHillsborough in the same manner as it operates Favorites at Woodbridge.

PURPOSE &SCOPE

The purpose of the NJTHA acquiring the license for Favorites at Hillsborough is toexpand' OTWs in this State consistent with the Legislature's vision to N.J.S.A. 5:5-130, etseg Establishing more OTWs will enable the NJTHA to offset costs in operatingMonmouth Park and to thereby supplement purses for New Jersey thoroughbred races.

While the Racing Commission has granted the NJTHA approval to participate insimulcasting and the account wagering system for 2014, the NJTHA now seeks all.approvals necessary to operate Favorites at Hillsborough. ..

Establishing an OTW in Somerset County will benefit racing in New Jersey as awhole. It will attract new bettors to the industry because the terminals are located in abar/restaurant that never had betting in the past.. The terminals will increase interest inhorse racing that will bring new bettors to racetracks around the state, as Somerset Countyhas many horse farms without a dedicated outlet for increasing the public's interest inhorseracing. The terminals also will not have any negative effect on live racing due to thelocation of Somerset County that is on the other side of the State from all of the race tracks.The location will spark interest, which will then motivate patrons to travel to see liveracing.

STRUCTURE OF NJTHA ENTERPRISE

The NJTHA is a New Jersey non-profit corporation. Its officers and boardmembers are listed on the NJTHA's Table of Organization. NJTHA has no upstream ordownstream entities. The NJTHA has hired two independent third-party contractors,Darby Development, LLC ("Darby") and Elite Consulting, LLC ("Elite"), for themanagement and continued development of thoroughbred horse racing in New Jersey,including the management and day-to-day operations of the off track wagering.

The NJTHA will continue to rely upon Derby for day to day operations issues, butthe NJTHA will retain ultimate decision-making authority. The NJTHA will also continueto rely upon advice and consultation from Elite Consulting, LLC {"Elite"), which will

2

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provide advice regarding the future expansion of OTWs in this State pursuant to theNJTHA.'s share of available licenses in the Participation Agreement.

INSURANCE

NJTHA will procure insurance policies for all aspects of its operations, includingliability insurance, ire and extended coverage, worker's compensation insurance, and allother such insurance as will be necessary in order to successfully and safely operate theHillsborough OTW facility.

Dated: March 21, 2014

NEW JERSEY THOROUGHBREDHORSEMEN'S ASSOCIATION, INC.

BY ~ ~ `~ ~~=~MICHAEL D. SCHOTTLAND, ESQ.CHRISTINA VASSILIOU HARVEY,ESQ.

3

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Table of Organization

NJTHA

-,:_ ;,::~.

~`;;'

Darby Development, LLCManaging Members:

Ronald Drazin and Brian Drazin

Favorites at Hillsboro, LLC[Manages Property]

Managing Member—Darby Development,

Monmouth Park Spirits, LLC[Holder of Liquor License]

Managing Member —Darby Development, LLC

Mcloone's Hillsborough Limited LiabilityCompany

[Manages Food and Beverage On-Site]

Contract — to be signed

So(e and Managing Member —TimMcLoone

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CONFIDENTIAL FINANCIAL DOCUMENT-NOT TO BE RELEASED PURSUANT TO N.J.S.A. 47:11-1 .'1

NEW JERSEI' THOROUGHBREDHORSEMEN'S ASSOCIATION

COMBINED FINANCIAL STATEMENTSDECEMBER 31, 2013

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CONFIDENTIAL FINANCIAL DOCUMENT-A+10T TO BE RELEASED PURSUANT TO ~I.J.S.A. 47:11-'1.1

CONTENTS

Independent auditors' report 1

Combined statement of financial position 3

Combined statement of activities 4

Combined statement of cash flows 5

Notes to combined financial statements 6 -11

Combining schedules

Combining schedule of financial position 12

Combining schedule of activities I3

Combining schedule of administrative expenses 14

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PAUL J. PERKOWSK[, CPA

SALUATORE V.PA7TI,CPA

CONFIDENTIAL FINANCIAL DOCUMENT-NOT TO 8E ~tELE~1SED PURSl1AR~IT TO N.J.S,A. 47:1A-1.'3

PERKOWSKI SL ASSOCIATES, LLCCERT'IFIID PUBLIC ACCOL7NTl~NTS

TELEPHONE: (732) 974-05~1

FAX: (132) 974-0552wwwperkowski-llc.com

INDEPENDENT AUDITORS' REPORT

To the Board of DirectorsNew Jersey Thoroughbred Horsemen's Association

-MEMBERS OF-

AMER[CAN tNST[TUTE OF CPA'S

NEW JERSEY SOCIETY OF CPA'SHEW YORK SOCIETY OF CPA'S

We have audited the accompanying combined statement of financial position of the New JerseyThoroughbred Horsemen's Association (the "Association"), a nonprofit organization, as ofDecember 31, 2013, and the related combined statements of activities and cash flows for the yearthen ended and the related notes to the financial statements.

Management's Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these combined financialstatements in accordance with accounting principles generally accepted in the United States ofAmerica; this includes the design, implementation, and maintenance of internal control relevantto the preparation and fair presentation of financial statements that are free from materialmisstatement, whether due to fraud or error.

Auditor's ResponsibilityOur responsibility is to express an opinion on these financial statements based on our audit. Weconducted our audit in accordance with auditing standards generally accepted in the United Statesof America. Those standards require that we plan and perform the audit to obtain reasonableassurance about «~hether the financial statements are free of material misstatement. An auditinvolves performing procedures to obtain audit evidence about the amounts and disclosures in theftnancial statements. The procedures selected depend on the auditor's judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraudor error. In making those risk assessments, the auditor considers internal control relevant to theentity's preparation and fair presentation of the financial statements in order to design auditprocedures that are appropriate in the circumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity's internal control. Accordingly we express no suchopinion. An audit also includes evaluating fhe appropriateness of accounting policies used andthe reasonableness of significant accounting estimates ttiade by management, as well asevaluating the overall presentation of the financial statements. We believe that the audit evidencewe have obtained is sufficient and aprropriate to provide a basis for our aadit opinion.

Basis for Qualified OpinionThe Association leas entered into agreements with the State of New Jersey to assumeresponsibilities for various thoroughbred racing activities in the State and (ease the MonmouthPark Racetrack. To assist in meeting its obligations, the Association has an operating agreementwith a third party to manage t1~e daily activities at Monmouth Park on its behalf as discussed inNote 12 to the financial statements. We were unable to obtain complete financial informationrelating to the aforementioned agreements to include in these combined financial statements forthe year ended December 31, 2013 to reflect the totxi f nancial position and operating activities ofthe Association for the year then ended.

1011 HIGHWAY 71, SPRING LAKE, NEW JERSEY 07762

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CONFIDENTIAL FINANCIAL DOCUMEMT-PfOT TO BE RELEASED PUg2SUAWY TO N.J.S.,~. 47:'IA-'I.1

Qualified OpinionIn our opinion, except for the possible effects of the matter discussed in the Basis for QualifiedOpinion paragraph, the combined financial statements referred to above present fairly, in allmaterial respects, the financial position of the New Jersey Thoroughbred Horsemen's Associationas of December 31, 2Q13, and the changes in their net asset and their cash flows for the year thenended in conformity with accounting principles generally accepted in the United States ofAmerica.

Report of SuppCemeniary InformationOur audit was conducted for the purpose of forming an opinion on the financial statements as awhole. The combined financial statements is presented for purposes of additional analysis and isnot a required part of the financial statements. Such information is the responsibility ofmanagement and was derived from and relates directly to the underlying accounting and otherrecords used to prepare the financial statements. The information has been subjected to theauditing procedures applied in the audit of the financial statements and certain additionalprocedures, including comparing and reconciling such information directly to the underlyingaccounting and other records used to prepare the financial statements or to the financialstatements themselves, and other additional procedures in accordance with auditing standardsgenerally accepted in the United States of America. In our opinion, the information is fairlystated in all materials respects in relation to the financial statements as a whole.

February 28, 214

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CONFIDENTIAL FINANCIAL DOCUMENT-OVOT TO BE FtELIEASED PURSUANT TO N.J.S.A. 47:'iA-1.'1

NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCIATIONCOMBINED STATEMENT OF FINANCIAL POSITION

DECEMBER 31, 2013

Current assets:Cash and cash equivalentsRestricted cashDue from related party

Total cun-ent assets

Total assets

ASSETS

LIABILITIES AND UNRESTRICTED NET ASSET

Current liabilities:Accounts payable and accrued expensesHealth and benevolent claims payableDeferred revenueOther current liabilities

Total current liabilities

Unrestricted net asset

Total liabilities and unrestricted net asset

See notes to financial statements.3

$ 327,1564,197, ] 55

35,6574,559,968

$ 4,559,968

$ 14,70011,859

333,3342,288,9412,648,834

1,911,134

$ 4,559,968

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CONFIDENTIAL FINANCIAL DOCUitiItENT-feiOT YO BE RELEASED PUE2SUAPdT TO ►g1.J,5.A. 47.'i~-'i.'1

NEW .1ERSEY THOROUGHBRED HORSEMEN'S ASSOCIATIONCOMBINED STATEMENT OF ACTIVITIES

YEAR ENDED DECEMBER 3 Y , 2013

Revenues:Funding at 2.9%Public purpose fundingState of New Jersey casino simulcast fund

Total revenues

Program services:Medical benefitsBackstretch programsAdministrator service feeScholarship programChaplaincySalaries and related expensesFuture of thoroughbred racingBenevolence

Total program services

Supporting services:Administrative expenses

Total program and supporting services

Income from activities

Other income (expense}:Interest incomeLegal and legislative expensesPolitical expenditures

Total other income (expense)

Change in net asset

Unrestricted net asset, beginning of year

Unrestricted net asset, end of year

0

$ 715,626751,165

56,0011,522,792

289,48543,66534,534

4,00014,922

257,45016,28927,612

687,957

596,9231,284,880

237,912

15,681(675,075)

{28,400)(687,794)

(449,882)

2,361,O1b

$ 1,911,134

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CONFIDENTIAL FINA~ICI~1L DOCU11ilENT-Pd~7 TO ~~ R~LEAS~D Pl3RSUANT TO Pd..l.S.~1. 47:'!i4-'9 .'1

NEW JERSEY THOROUGH~3RED HORSEMEN'S ASSOCIATIONCOMBINED STATEMENT OF CASH FLOWS

YEAR ENDED DECEMBER 31, 2013

Cash flows from operating activities:Change in net asset $ (449,882)

Chanties in assets and liabilities:Decrease in income receivable 124,001Decrease in related party receivable 464,343Decrease in accounts payable and accrued liabilities (328,985)

Net cash used by operating activities (190,523)

Net decrease in cash (190,523)

Cash, including restricted cash of $4,450,214, beginning of year 4,714,834

Cash, including restricted cash of $4,197,155, end of year $ 4,524,311

See notes to f nancial statements.5

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CONFIDENTIAL FINANCIAL ~OCUM~NT-PIO'T' TO BE RELEASED PU~tSUAN'C TO ~d.J.S.A. 47:~A,-'1.1

NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCTATTONNOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2013

1. Nature of Activities and Significant Accounting Policies

Nature of Activities

The New Jersey Thoroughbred Horsemen's Association, Inc. (NJTHA orAssociation), was incorporated in February, 1988 in the State of New Jersey. TheAssociation represents thoroughbred owners' and trainers' interests in the State ofNew Jersey, specifically to improve racing conditions in the thoroughbred industryfor all horsemen and their employees and promote the common business interest ofthe members in matters before government agencies, the management of New Jerseythoroughbred racetracks and other industry related organizations. The Associationreceives substantially all of its revenue from New Jersey horse racing tracks.

The New Jersey Thoroughbred Horsemen's Association Employee Benefit Trust(Trust) was established in January, 1992 as part of the agreement made by andbetween the New Jersey Thoroughbred ~Iorsemen's Association, Inc., and theTrustees, whereby the Trust administers one or more employee welfare benefit plans,for the exclusive use of its members, and individuals, who as independent contractors,render services to members of the Association.

Licensed qualified backstretch employees are eligible for medical and dental healthcare coverage within the limits set forth by the Trustees. In addition, the Trust,provides for death benefits of $3,500 for qualified deceased members plus otherbenevolence as approved by the Trustees.

Combination Policy

The accompanying combined statement of financial position, combined statement ofactivities and combined schedule of administrative expenses, referred to as NewJersey Thoroughbred Horsemen's Association includes the accounts of the NewJersey Thoroughbred Horsemen's Association, Tnc. and the New JerseyThoroughbred Horsemen's Association Employee Benefit Trust, both of which areunder cornrnon control. All significant intercompany balances and transactions havebeen eliminated in combination.

Use of Estimates

The preparation of combined financial statements in conformity with generallyaccepted accounting principles requires management to make estimates andassumptions that affect certain reported amounts of assets and liabilities and thedisclosure of contingent assets and liabilities at the date of the financial statementsand the reported an~ounts of reve~~ues and expenses dut•in~ the reporting period.Actual results could differ fi•on~ those estimates.

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CONFIDENTIAL FIPdANC1AL DOCl7MEPdT-NOT TAO 8E RELEASED PURSUA?dT TO f~1.J.S.A. 47:1 1-1.1

NEW JERSEY THOROUGHBRED AORSEMEN'~ ASSOCIATIONNOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2013

1. Nature of Activities and Significant Accounting Policies -continued

Basis of Presentation

Financial statement presentation follows the recommendations of the FinancialAccounting Standards Board. The Association is required to report infornlationregarding its financial position and activities according to three classes of net assets:unrestricted net assets, temporarily restricted net assets and permanently restricted netassets.

Cash and Cash Equivalents

Cash and cash equivalents includes all cash balances and highly liquid investmentswhich have maturities of three months or less from the date of purchase.

Revenue Recognition

The Association's revenues are based on a predetermined formula applied to apercentage of the on-site wagering and simulcasting at various New Jersey horseracetracks. In 2004, the percentage increased to 3.5 from 2.9 for Monmouth Park andMeadowlands racetracks, pursuant to contract terms, based on earned purse levels andenhancements. For 2011, the percentage increased by another 2.5 %for other uses notconsidered as part of statutory funding. For 2013, there was funding at a total of 6%which resulted in statutory funding of about $71b,000 and nonstatutory of about$751,000.

During 2011, additional benefits funding of $1 million was provided for payments ofmedical claims. The amount could be utilized over a period of years limited to$333,333 annually. The remaining balance of $333,334 is in deferred revemie for theyear ended December 31, 2013.

Nonstatutory funding amounts in excess of its statutory fiinding are, in theAssociation's opinion, not subject to New Jersey Racing Commission (NJRC)regulation. The Association records statutory and nonstatutory funding as revenues inits combined statement of activities. The nonstatutory portion is classified as "publicpurpose:"

7

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C04dFIDE~ITIAIL ~19~de~NiC1AL DOCUOVIEMT-P~iOT YO BE RELEASED €~U~t~UAP1T TO W.J.S.Ja. 47:'1R~-1.1

NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCIATIONNOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 20132. Restricted Cash

A portion of the Association's restricted cash totaling $135,898 was statutorilyrestricted by the NJRC. The NJRC has maintained the Association's 2.9 Statutory andHorsemen's Bookkeeper's Interest Funds since June, 2005 in an escrowed interestbearing account. Upon the Association's request and the NJRC's approval, amountsare released for benefits and operating expenses.

The remaining restricted cash held in attorney trust accounts is primarily for theescrow amount required by the lease obligation for Monmouth Park (see Note 12).The total amount of other current liabilities is included in restricted cash.

Restricted cash consists of the following:

Statutory 2.9 account $ 135,898Attorney trust accounts 4,061,257

4,197.155

3. Employee Pension Plan

The Association provides a defined contribution pension plan for eligible employeeswith one year of service, who have not attained age sixty-five or older. The planinvests in a group annuity insurance contract. Past service is not considered under theplan. The Association contributes ten percent of the eligible employees' salary. Fullvesting takes place after one year of service, with forfeitures used to offset futurecontributions. Pension expense totaled approximately $37,582, and is allocatedbetween program services and administrative expenses.

4. Pension Plans

The Association administers the THBA Pension Plan ("Plan") for backstretchpersonnel. There was no contribution to the backstretch pension plan in 2013. ThePlan does not meet the minimum funding requirements for the year ended December31, 2013. The appropriate notices have been filed with the Pension Benefit GuarantyCorporation (" PBGC") and provided to Plan participants.

The Association is awaiting a final opinion from legal counsel concerning the fundingof the THBA Plan. They have been advised that based upon a 1992 Internal RevenueService opinion letter, no pension plan contribirtions for licensed backstretchpersonnel should be made. The Plan is in the process of notifying the appropriateparties that the Association's further contributions maybe prohibited.

The Association also administered the New Jersey Trainers Pension Plan for retiredtrainers. Neither the Association nor any other entity has a responsibility to fund theNew Jersey Trainers Pension Plan. Benefits ceased during 2013 as there are no morefunds available.

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CONFID~MTIAL FIN~@VCIAL ~OCUM~NT-PlOT TO ~~ RELE~ISED PURSl1.~idT TO N.J.S„~. 47:1A-1.'i

NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCIATIONNOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 2013

5. Transactions with Related Parties

Several directors of the Association serve as trustees of the New Jersey Horsemen'sAssociation Employee Benefit Trust.

Due from related party represents the remaining balance of a $SOQ,000 loan bearinginterest at 3%, to Darby Development LLC (Darby), the managing company forMonmouth Park (see Note 12) less the management fees due Darby of $250,000 and$229,167 plus accrued interest of $5,068 and $9,755 for the years ended December31, 2013 and 2012, respectively. The remaining loan balance will continue to beoffset by fees due Darby per the management agreement.

6. Contract with The Loomis Company

The Trust entered into an agreement with The Loomis Company (Loomis) wherebyLoomis, as claims administrator and care management coordinator, assumes theresponsibility of the day-to-day serving of the medical plan on behalf of the Trust.For these services, the Trust agrees to pay administrative fees as set forth within theagreement.

7. Income Tax Statuses

The Association qualifies as atax-exempt organization under Section 501(c)(6) of theInternal Revenue Code. Accordingly, the Association is not subject to Federal incometax. The Trust is a grantor trust as defined by the Internal Revenue Code.

The Association believes that its increased involvement with thoroughbred racingactivities and the lease of Monmouth Park (see Note 12) does not impact its tax-exempt status.

The Association has determined that there are no unrecognized tax positions as ofDecember 31, 2013.

8. Leal and Legislative Expenses

The .Association incurs certain expenses when promoting its program services.Without incurring these expenses, the Association could possibly experience areduction of its revenues.

During 2013 additional legal fees were incurred with efforts related to the leaseagreement with the State of New Jersey and agreements vaith other parties asdescribed in Note 12.

D

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COtJ~'IDEtdTIAL FItdA1VC1Ai. Di~CUMEtd'd`-AdOT TO BE F2~LEASED PURStl~,PdT T~ 1~I..i.S.~. 47:'!A-'1.1

NEW JERSEY THOROUGHBRED HORSEMEI~1'S ASSOCIATIONNOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 20139. Political Expenditures

The Association funded Thoro-Pac, a political action committee, and NJTHA SSF, aseparate segregated fund, in promoting its program services from public purposefunds,

10. Commitments and Contingencies

The Association is involved in various claims or litigation in the ordinary course of

business. Management believes that the ultimate resolution of these matters, eitherindividually or in the aggregate, will not have a matei7al adverse impact on the futureresults of operations, cash flows or financial position of the Association.

11. Fair Value Measurements

The Association has adopted the Fair Value Measurement standard. The standard

defines fair value, establishes a framework for measuring fair value, and expands

disclosures about fair value measurements.

The Association's financial instruments consist primarily of cash arzd cash equivalents,

accounts payable and accrued expenses.. The carrying value of these financialinstruments are considered to be representative of their respective fair values. The

following table presents information about fair value measurement as of December 31,2013.

Financial Instruments Recorded atFair Value on a Recurring Basis: Carrying

AmountAssets:Cash and cash equivalentsRestricted CashTotal assets:

Financial Instruments Recorded atCarrvin~ Amount:

Liabilities:Accounts payable and accrued

expenses`~'otal liabilities.

Fair Value Measurements at ReportingDate

December 31, 2013

QuotedPrices in.Active Significant

Markets for Other Significant .Identical Observable Unobservable

Estimated Assets Inputs InputsFair Value Level 1 Level 2 Level 3

$ 327,156 $ 327,156 $ 327,156 $ — $ —4,197,155 4,197,155 4,197,155 — —

$ 4,714,834 $ 4,714,834 $ 4,714,834 $ — $ —

$ 26,559 $ 26,559$ 26,559 $ 26,559

1~

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CONFIDENTIAL FINANCIAL DOCUMEIVT-t~I~OT TO SE R~LEASIED ~[/RSUAl~1T TO N.J.S.A. 47:1A-1.1

NEW JERSEY THOROUGHBRED HORSEMEN'S ASSOCIATIONNOTES TO COMBINED FINANCIAL STATEMENTS

DECEMBER 31, 201312. Monmouth Park Agreements

Lease of Monmouth Park

Effective May 1, 2012 the Association acquired the thoroughbred racing permit for theMeadowlands and the thoroughbred racing permit for Monmouth Park and signed alease with the State of New Jersey for Monmouth Park Racetrack.

The initial term of the lease ends December 31, 2016 with three ten year renewaloptions. During the initial term, the ground rent due is $1.00 annually. In the firstrenewal term, the annual ground rent is $250,000 plus a percentage of net profits. Forsubsequent terms, the annual ground rent increases to $500,000 plus a percentage ofnet profits.

There are additional amounts due under the lease to Two Rivers Water ReclamationAuthority for the wastewater collection system at Monmouth Park amounting to about$300,000 annually. Payments for this obligation are being made by Darby.

Management Agreement

The Association has entered into an agreement with Darby to manage the day-to-dayoperations of Monmouth Park Racetrack, develop the racetrack facilities and otherracing related activities. The annual fixed fee for the services rendered by Darby is$250,000 plus a share of net profits derived from certain racing related activities.

Darby is responsible to report on activities to the Association on a regular basis andthe Association's board of directors has the responsibility to oversee Darby's handlingof the operations.

Other Matters

In conjunction with the lease of Monmouth Park, the Association has an agreementwith a food concessionaire, Gourmet Dining Enterprises ("Gourmet"), to operate thefood and beverage business at Monmouth Park for an initial term of five years and anoptional additional term of five years. The agreement stipulates the fee to be paid toGourmet to manage the food concession for the initial year as $250,000 and then$200,000 for each subsequent year to be paid on a monthly basis. Also, theAssociation will receive 50% of the net profits derived by Gourmet from the foodconcessions at Monmouth Park according to a formula defined in the agreement.Payments to Gourmet under the agreement are being made by Darby.

13. Subse~c uent Events

We have evaluated all signiftcant activities through February 28, 2014, the date thisreport was available to be issued, and have concluded that no subsequent events haveoccurred that would require recognition in the financial statements or disclosures inthe notes to the financial statements.

11

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Ct]RIFiD~CP!'~IAL ~'19~1~P~ClAL D~CUiVi~~d'i'-~10T T~ ~3~ ~2~L~~~~D ~UR~~.1~1~7' T~ ~.,f.~.~1, 47;-1A-'1 .'I

COMBINING SCHEDULES

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