UK Betting Firms Gamble on United States After Sports Wager Ruling

UK wagering companies gamble on US after sports betting wager judgment

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5 June 2018

By Natalie Sherman

Business reporter, New york city

It's high stakes for UK firms as sports betting wagering starts to spread out in America.

From Tuesday, brand-new rules on sports betting entered into result in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey could start accepting sports betting bets as early as Friday.

The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports sports betting.

The industry sees a "once in a generation" opportunity to develop a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK firms, which are facing consolidation, increased online competition and harder rules from UK regulators, the timing is particularly appropriate.

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But the market states depending on the US remains a dangerous bet, as UK companies deal with complex state-by-state policy and competitors from established regional interests.

"It's something that we're actually concentrating on, however equally we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US fantasy sports betting site FanDuel.

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits in 2015, according to a report by Technavio, external published in January.

Firms are wanting to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting wagering.

The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to local lawmakers.

That is expected to cause substantial variation in how firms get accredited, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending on aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe the majority of people ... are looking at this as, 'it's a chance however it's not going to be $20bn and it's going to be state by state and it's going to take some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in yearly income.

But bookies deal with a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip up until relatively recently.

In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.

States have also been sluggish to legalise numerous forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting wagering is usually seen in its own category, "it plainly stays to be seen whether it gets the type of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

David Carruthers is the previous president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he says UK companies need to approach the market carefully, choosing partners with care and preventing mistakes that might result in regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for business," he says. "It truly depends on the outcome of [state] legislation and how the service operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which want to gather a portion of revenue as an "integrity fee".

International business deal with the added challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottery games and Native American people that are seeking to protect their grass.

Analysts state UK firms will need to strike collaborations, providing their expertise and innovation in order to make inroads.

They point to SBTech's current statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.

"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

Joe Asher, primary executive at William Hill US, is clear-eyed about the realities.

The company has actually been buying the US market given that 2011, when it acquired 3 US companies to develop an existence in Nevada.

William Hill now utilizes about 450 people in the US and has actually announced collaborations with casinos in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has actually invested millions together with a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a home name in Nevada but that's not always the objective everywhere.

"We definitely intend to have a really significant brand name existence in New Jersey," he said. "In other states, it will just depend upon policy and possibly who our local partner is."