UK wagering companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman
bit.ly
Business press reporter, New York

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

From Tuesday, brand-new guidelines on sports betting entered result in Delaware, a tiny east coast state about two hours from Washington.

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

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

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

For UK companies, which are facing combination, increased online competition and tougher rules from UK regulators, the timing is particularly opportune.

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But the industry states relying on the US remains a dangerous bet, as UK companies face complex state-by-state regulation and competitors from interests.

"It's something that we're truly focusing on, however similarly we don't wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.
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'Take some 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 released in January.

Firms are intending to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.

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 concern to local lawmakers.

That is expected to cause considerable variation in how firms get licensed, where sports betting wagering can take place, and which occasions are open to speculation - with huge implications for the size of the market.

Potential earnings varieties from $4.2 bn to almost $20bn each year depending on elements like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I believe the majority of people ... are taking a look at this as, 'it's an opportunity but 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 in some type by 2023, developing a market with about $6bn in yearly profits.

But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting shops are a frequent sight.

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip till relatively 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 forms of online gaming, despite a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting is usually seen in its own classification, "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 wagering regulation.

David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK companies ought to approach the marketplace thoroughly, picking partners with care and preventing mistakes that might result in regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for service," he states. "It really depends on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to collect a portion of profits as an "stability fee".

International companies deal with the added difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their turf.

Analysts state UK companies will need to strike collaborations, providing their proficiency and technology in order to make inroads.

They indicate SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.

"It will be a win-win for everyone, but it will be collaborations and it will be driven by innovation," Mr Hawkley said.
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'It will simply depend'

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

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

William Hill now utilizes about 450 people in the US and has actually announced partnerships with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.

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

"We certainly intend to have a really considerable brand name existence in New Jersey," he stated. "In other states, it will simply depend on guideline and potentially who our regional partner is."

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

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