UK wagering firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on sports betting came into impact in Delaware, a small east coast state about two hours from Washington.

Neighbouring New Jersey could begin 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 method for states to enable sports betting.
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The industry sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

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

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But the market states depending on the US stays a dangerous bet, as UK business deal with complex state-by-state policy and competitors from entrenched local interests.

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

'Take some time'

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

Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
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The ruling discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to local lawmakers.

That is expected to result in substantial variation in how firms get accredited, where sports betting can occur, and which events are open to speculation - with huge implications for the size of the market.
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Potential profits ranges from $4.2 bn to almost $20bn yearly depending upon aspects like how numerous states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe many people ... are taking a look 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 wagering in some kind by 2023, creating a market with about $6bn in yearly revenue.

But bookmakers face a far various landscape in America than they perform in the UK, where sports betting stores are a frequent sight.

US laws minimal gambling largely to Native American lands and Nevada's Las Vegas strip until reasonably just recently.

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

States have actually also been slow to legalise numerous forms of online sports betting, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.
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While sports betting is typically seen in its own category, "it plainly stays to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.
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Now an expert, he says UK companies must approach the marketplace thoroughly, choosing partners with caution and preventing bad moves that might result in regulator reaction.

"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is a chance for organization," he says. "It really is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of revenue as an "integrity cost".

International companies deal with the included difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are seeking to safeguard their grass.

Analysts say UK firms will need to strike collaborations, using their proficiency and innovation in order to make inroads.

They point to SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

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

'It will simply depend'

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

The company has actually been investing in the US market considering that 2011, when it acquired three US firms to develop an existence in Nevada.

William Hill now employs about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.
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It works as danger manager for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.

Mr Asher said William Hill has ended up being a home name in Nevada however that's not always the goal everywhere.

"We certainly intend to have a very significant brand name presence in New Jersey," he said. "In other states, it will just depend on regulation 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 take place on the first day."

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