UK wagering firms bet 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 companies as sports betting wagering starts to spread in America.

From Tuesday, new guidelines on wagering came into effect in Delaware, a tiny east coast state about two hours from Washington.

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

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 enable sports betting.

The market sees a "once 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 firms, which are grappling with combination, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.

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

"It's something that we're truly focusing on, however equally we don't want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.

'Require time'

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

Firms are intending to use more of that activity after last month's choice, which overruled a 1992 that barred states outside of 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 wagering, leaving that concern to local legislators.

That is anticipated to cause considerable variation in how companies get certified, where sports betting wagering can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential revenue ranges from $4.2 bn to almost $20bn annually depending upon aspects like the number of states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

Now, he stated: "I believe the majority of people ... are taking a look at this as, 'it's a chance however it's not going to be $20bn and it's going to be state by state and it's going to take some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual revenue.

But bookies face a far various landscape in America than they do in the UK, where wagering shops are a regular sight.

US laws limited gambling mainly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have also been sluggish to legalise numerous types of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.

While sports betting is normally seen in its own category, "it plainly stays to be seen whether it gets the kind of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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 specialist, he states UK firms must approach the market carefully, selecting partners with care and avoiding errors that could cause regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is an opportunity for company," he states. "It truly is reliant on the result of [state] legislation and how the organization operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to gather a percentage of revenue as an "stability fee".

International companies face the included difficulty of an effective existing gaming market, with casino operators, state-run lottery games and Native American people that are looking for to protect their grass.

Analysts say UK companies will need to strike collaborations, offering their know-how and innovation in order to make inroads.
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They indicate SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.

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

'It will simply depend'

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

The company has been purchasing the US market considering that 2011, when it purchased three US companies to develop a presence in Nevada.

William Hill now employs about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a household name in Nevada however that's not necessarily the objective all over.

"We definitely plan to have a very substantial brand name existence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our local partner is."

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