UK wagering companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new rules on sports betting entered into effect in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could begin 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 the method for states to allow sports betting.

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

For UK firms, which are grappling with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the industry states relying on the US stays a risky bet, as UK business deal with complicated state-by-state policy and competitors from entrenched regional interests.

"It's something that we're actually focusing on, but similarly we do not want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.

'Require time'

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

Firms are wishing 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 couple of others from authorising sports betting.

The judgment found 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 substantial variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to practically $20bn annually depending on factors like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think many people ... are looking at this as, 'it's a chance 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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some form by 2023, developing a market with about $6bn in annual income.
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But bookmakers face a far various landscape in America than they do in the UK, where wagering stores are a regular sight.
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US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.
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In the popular creativity, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.

States have likewise been slow to legalise lots of kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to remove barriers.

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

David Carruthers is the previous chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he says UK firms ought to approach the marketplace carefully, selecting partners with care and avoiding errors that might cause regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm unsure whether it is a chance for business," he states. "It truly is reliant on the outcome of [state] legislation and how the service operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to collect a portion of profits as an "stability charge".

International companies deal with the added challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American people that are looking for to safeguard their turf.

Analysts state UK firms will need to strike collaborations, providing their knowledge and innovation in order to make inroads.

They indicate SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals 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 just depend'

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

The company has actually been investing in the US market since 2011, when it purchased three US firms to establish an existence in Nevada.
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William Hill now utilizes about 450 individuals in the US and has revealed collaborations with casinos in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has actually invested millions along with a local developer 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 everywhere.

"We certainly intend to have a very substantial brand existence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our regional partner is."

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

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