UK sports betting companies 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 starts to spread in America.

From Tuesday, new guidelines on wagering entered into effect in Delaware, a tiny east coast state about 2 hours from Washington.

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

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

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

For UK firms, which are grappling with debt consolidation, increased online competition and harder rules from UK regulators, the timing is especially appropriate.

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

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

'Take time'

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

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

The ruling found 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 significant variation in how companies get licensed, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the market.

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

"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for specialists 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 some 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, creating a market with about $6bn in yearly earnings.

But bookies face a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.

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

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

States have actually also been slow to legalise numerous forms of online gaming, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.

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

David Carruthers is the previous primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.
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Now an expert, he says UK companies must approach the marketplace carefully, picking partners with care and avoiding missteps that might lead to regulator backlash.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for business," he says. "It really is reliant on the result of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which want to gather a portion of income as an "integrity cost".

International business deal with the included obstacle of an effective existing video gaming market, with casino operators, state-run lottery games and Native American people that are seeking to safeguard their turf.

Analysts state UK companies will require to strike collaborations, offering their proficiency and innovation in order to make inroads.

They indicate SBTech's current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.

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

'It will just depend'
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Joe Asher, president at William Hill US, is clear-eyed about the realities.

The business has been buying the US market considering that 2011, when it purchased three US firms to develop a presence 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.

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

Mr Asher said William Hill has ended up being a household name in Nevada but that's not always the goal all over.

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

"The US is going to be the biggest sports betting wagering market in the world," he added. "Obviously that's not going to occur on the first day."

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