UPDATE: Talks between Murphy, lawmakers produce no deal yet again

New Jersey's racetrack and off-track wagering operators have been warned they'd be forced to close if the state government shuts down because Gov. Phil Murphy and lawmakers can't reach a state budget compromise by Saturday at midnight.

Atlantic City casinos, meanwhile, would be allowed to remain open for a week even as the state workers charged with regulating them are furloughed, according to two letters sent out Friday by divisions of the state Attorney General's Office and obtained by NJ Advance Media.

This could also temporarily shut down sports betting at Monmouth Park in Oceanport, only two weeks after such wagering became legal in New Jersey.

The only way you can place a sports bet in New Jersey right now is in person at casinos and tracks, and Monmouth Park is the only track with a sports book so far. Online sports wagering has not started yet.

Casinos would still be allowed to take sports bets during a shutdown, the Attorney General's Office said.

The letters come as Murphy and his fellow Democrats who control the state Legislature remain in a stalemate over New Jersey's new budget, which must be approved by the end of the month. Otherwise, Murphy could order a shutdown that could close state parks and beaches and close state offices and courts until a deal is reached.

The news, which was first reported by Politico New Jersey, drew a rebuke from state Senate President Stephen Sweeney, who has remained at loggerheads with Murphy over the state's finances.

"They can't do that," Sweeney, D-Gloucester, told NJ Advance Media, after emerging from another negotiating session with the governor in Trenton on Friday morning. "There's already a law in place."

Under state law stemming from the 2006 shutdown, casinos and racetracks are allowed to remain open for up to a week if a state of emergency is declared because of a blown budget deadline.

But a letter sent Friday by the director of the New Jersey Racing Commission said the law required racetrack operators to submit notice to the state by June 1 if they intended to stay open in the event of a shutdown.

"No New Jersey racetrack has complied with the requirements," the letter claimed.

But Dennis Drazin, the operator of Monmouth Park, said he did send such a letter to the commission before June 1.

Drazin added he's "still waiting to see" what will happen.

"I take these things in stride," he added. "I do my job and I try to keep racing open. I try to cooperate with the governor."

"At this point, we're a pawn on a chess board in a game I don't want to be playing," Drazin said. "But I want to do what's right by the state of New Jersey."

A separate letter sent to Atlantic City casinos by the Division of Gaming Enforcement said they had met the deadline but state gambling enforcement officials "have not been deemed" essential employees and will have to be replaced by temporary workers paid for by the gambling halls.

The letter states that "while casinos can stay open without regulators present, certain internal controls must be in place so that private individuals complete the primary responsibilities that the regulators would otherwise fulfill."

The requirements include hiring an accountant to keep tabs on transactions and putting electronic monitoring in place of gambling activities. Casinos that fail to comply would face "enhanced penalties," the letter states.

Murphy and top lawmakers disagree over which taxes to raise to pay for increases to public school funding, NJ Transit, and more.

Murphy wants to increase income taxes on millionaires and revert the state sales tax to 7 percent form 6.625 percent.

But Sweeney and state Assembly Speaker Craig Coughlin, D-Middlesex, oppose those ideas, saying New Jersey is over-taxed.

Instead, lawmakers have offered to raise Corporation Business Taxes on the state's largest corporations to a nation-high 13 percent for four years, double the Realty Transfer Fee on high-end home sales to 2 percent and expand the sales tax to include short-term rentals.

Murphy met with Sweeney and Coughlin at his office Friday morning to discuss possible compromises. Sweeney said they will meet again in the afternoon.

Lawmakers refused to divulge details of the morning sit-down.

"We're talking," Sweeney said. "I'm not gonna say anything else."

Asked if he's hopeful, Coughlin said: "I'm always hopeful. Hope springs eternal."

Sports betting goes live at Monmouth Park, Gov. Murphy places first legal bet 22 Gallery: Sports betting goes live at Monmouth Park, Gov. Murphy places first legal bet

NJ Advance Media staff writers Matt Arco and Samantha Marcus contributed to this report.

S.P. Sullivan may be reached at ssullivan@njadvancemedia.com. Follow him on Twitter. Find NJ.com on Facebook.

Brent Johnson may be reached at bjohnson@njadvancemedia.com. Follow him on Twitter @johnsb01. Find NJ.com Politics on Facebook.