UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on sports betting entered result in Delaware, a small east coast state about 2 hours from Washington.

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

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

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

For UK companies, which are grappling with consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially opportune.

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

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

'Require 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 released in January.

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

The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to regional legislators.

That is to lead to significant variation in how firms get accredited, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending on aspects like how numerous states move 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 big'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe 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, forecasts that 32 states will legalise sports betting in some form by 2023, producing a market with about $6bn in yearly earnings.

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

US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip until fairly recently.

In the popular creativity, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
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States have actually likewise been slow to legalise many types of online gaming, in spite of a 2011 Justice Department opinion that appeared to get rid of obstacles.

While sports betting wagering is generally viewed in its own classification, "it clearly remains to be seen whether it gets the type of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the previous primary executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.
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Now an expert, he states UK firms should approach the market carefully, picking partners with care and avoiding mistakes that could cause regulator reaction.
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"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is an opportunity for company," he states. "It actually is dependent on the outcome of [state] legislation and how the company operators pursue the opportunity."

'It will be collaborations'
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As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a percentage of revenue as an "integrity fee".

International business deal with the added challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to defend their turf.

Analysts say UK companies will need to strike partnerships, offering their knowledge and innovation in order to make inroads.
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They indicate SBTech's current announcement that it is supplying 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 everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The business has actually been buying the US market given that 2011, when it acquired three US firms to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has invested millions together with a local developer 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 an extremely considerable brand presence in New Jersey," he said. "In other states, it will just depend on regulation and potentially who our local partner is."

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

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