UK wagering companies bet on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on wagering entered impact in Delaware, a small east coast state about two hours from Washington.

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

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

For UK companies, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially opportune.

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But the industry says relying on the US stays a risky bet, as UK business face complex state-by-state policy and competitors from established local interests.

"It's something that we're truly concentrating on, however equally we don't desire to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.

'Take time'

The US accounted for 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 use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond 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 really legalise sports betting, leaving that concern to local lawmakers.

That is anticipated to result in significant variation in how companies get accredited, where sports betting wagering can happen, and which occasions are open to speculation - with big implications for the size of the market.

Potential revenue varieties from $4.2 bn to almost $20bn annually depending upon 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 huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

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

'Remains to be seen"

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

But bookmakers deal with a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.

US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have actually likewise been slow to legalise lots of types of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting wagering is typically seen in its own category, "it clearly remains to be seen whether it gets the sort of momentum people 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 detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now an expert, he states UK companies must approach the market thoroughly, choosing partners with caution and avoiding bad moves that could result in regulator backlash.

"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for company," he says. "It actually depends on the outcome of [state] legislation and how the organization operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of revenue as an "integrity fee".

International companies deal with the included obstacle of an effective existing gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are seeking to protect their grass.

Analysts say UK companies will need to strike collaborations, providing their knowledge and innovation in order to make inroads.

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

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

'It will simply depend'

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

The business has actually been investing in the US market considering that 2011, when it acquired 3 US companies to establish a presence in Nevada.

William Hill now employs about 450 people in the US and has actually announced partnerships with casinos in Iowa and New Jersey.
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It works as risk manager for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has become a household name in Nevada but that's not always the goal everywhere.

"We definitely mean to have an extremely substantial brand name presence in New Jersey," he said. "In other states, it will just depend upon guideline and potentially who our regional partner is."

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