UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

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

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

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

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

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But the market says depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're actually focusing on, but similarly we don't desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, 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 few others from authorising sports betting wagering.

The ruling 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 local lawmakers.

That is anticipated to lead to considerable variation in how companies get licensed, where sports betting can occur, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn yearly depending upon factors like how numerous states relocate to legalise, Oxford Economics estimated 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 said: "I believe a lot 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 time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, developing a market with about $6bn in yearly income.

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

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

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

States have actually likewise been sluggish to legalise numerous kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to eliminate obstacles.

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

David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he says UK companies ought to approach the market carefully, choosing partners with care and avoiding errors that could cause regulator backlash.

"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for business," he states. "It truly depends on the result of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting 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 "integrity fee".

International business face the included obstacle of an effective existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to protect their grass.

Analysts state UK firms will require to strike partnerships, offering their knowledge and innovation in order to make inroads.

They indicate SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals 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 simply depend'

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

The business has been buying the US market because 2011, when it bought three US companies to establish an existence in Nevada.

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

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

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

"We definitely intend to have an extremely substantial brand presence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our regional partner is."

"The US is going to be the greatest sports betting wagering market in the world," he included. "Obviously that's not going to take place on the first day."

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