UK betting companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman
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Business reporter, New York

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

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

Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

The industry sees a "when in a generation" chance to develop a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK firms, which are coming to grips with consolidation, increased online competitors and harder rules from UK regulators, the timing is especially suitable.

Why the betting industry faces an unpredictable future

How does prohibited sports betting wagering work and what are the worries?

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

"It's something that we're really concentrating on, but similarly we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.

'Require time'

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

Firms are wanting to use more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few 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, leaving that concern to regional lawmakers.

That is anticipated 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 ramifications for the size of the market.

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

"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.
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Now, he said: "I think many people ... are looking 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 take time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts 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 wagering shops are a regular sight.

US laws limited sports betting largely to Native American lands and Nevada's Las Vegas strip up until relatively 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 sluggish to legalise lots of forms of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting is typically viewed in its own category, "it clearly stays to be seen whether it gets the sort 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 chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he states UK firms need to approach the market thoroughly, picking partners with care and preventing errors that might result in regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is an opportunity for company," he says. "It actually is reliant on the outcome of [state] legislation and how the business operators pursue the chance."

'It will be collaborations'

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

International business deal with the included difficulty of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to protect their grass.
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Analysts say UK companies will need to strike partnerships, providing their proficiency and technology in order to make inroads.
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They point to SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

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

'It will just depend'

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

The business has been buying the US market considering that 2011, when it purchased 3 US companies to establish an existence in Nevada.

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

It works as danger manager for the Delaware Lottery and has actually invested millions together with a regional developer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a home name in Nevada however that's not necessarily the objective all over.

"We certainly mean to have a really significant brand name presence in New Jersey," he said. "In other states, it will simply depend upon guideline and possibly who our local partner is."

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

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