UK sports betting companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on betting entered impact in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
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The modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.

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

For UK firms, which are coming to grips with combination, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.

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But the market says counting on the US remains a risky bet, as UK business face complex state-by-state policy and competitors from entrenched local interests.

"It's something that we're actually focusing on, but similarly we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.

'Require time'

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

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

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

That is expected to result in considerable variation in how companies get certified, where sports betting can take place, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to nearly $20bn every year depending upon aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
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"There was a lot of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think many people ... are taking a look at this as, 'it's a chance but it's not going to be $20bn and it's going to be state by state and it's going to require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in yearly profits.

But bookies deal with a far different landscape in America than they carry out in the UK, where betting shops are a frequent sight.

US laws restricted gambling mostly to Native American lands and Nevada's Las Vegas strip until relatively just recently.

In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
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States have likewise been sluggish to legalise numerous forms of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting is typically seen in its own classification, "it clearly stays to be seen whether it gets the type of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.

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

Now a consultant, he states UK firms should approach the marketplace carefully, choosing partners with caution and avoiding missteps that might lead to regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm unsure whether it is an opportunity for company," he states. "It actually depends on the result of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to gather a percentage of earnings as an "stability cost".

International business face the added obstacle of an effective existing gaming industry, with casino operators, state-run lottos and Native American tribes that are looking for to defend their grass.

Analysts say UK companies will require to strike collaborations, using their know-how and technology in order to make inroads.
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They point to SBTech's current announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.

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

'It will just depend'

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

The business has been buying the US market since 2011, when it acquired 3 US firms to develop an existence in Nevada.

William Hill now uses about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a household name in Nevada but that's not always the objective all over.

"We definitely plan to have an extremely substantial brand name presence in New Jersey," he said. "In other states, it will simply depend on regulation and possibly who our regional partner is."

"The US is going to be the biggest sports betting wagering market worldwide," he included. "Obviously that's not going to occur on day one."

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