UK wagering firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city
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It's high stakes for UK companies as sports betting wagering starts to spread in America.

From Tuesday, brand-new rules on wagering entered impact in Delaware, a tiny east coast state about 2 hours from Washington.

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

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

The market sees a "as soon as in a generation" opportunity 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 companies, which are coming to grips with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly opportune.

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But the industry says counting on the US remains a risky bet, as UK companies face complicated state-by-state regulation and competitors from entrenched local interests.

"It's something that we're actually concentrating on, however similarly we do not wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.

'Take time'

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

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

The the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional legislators.

That is anticipated to lead to significant variation in how firms get accredited, where sports betting wagering can take place, and which events are open to speculation - with huge implications for the size of the market.

Potential profits varieties from $4.2 bn to practically $20bn annually depending upon elements like the number of states transfer to legalise, Oxford Economics approximated in a 2017 research 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 experts KPMG.

Now, he stated: "I think most people ... are looking 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 in some form by 2023, producing a market with about $6bn in yearly revenue.

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

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

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

States have actually likewise been slow to legalise numerous kinds of online gaming, despite a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

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

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

Now an expert, he says UK firms ought to approach the marketplace thoroughly, choosing partners with care and preventing mistakes that could lead to regulator backlash.

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

'It will be collaborations'
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As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to gather a percentage of income as an "stability charge".

International companies deal with the added challenge of a powerful existing video gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to defend their grass.

Analysts say UK firms will need to strike partnerships, using their knowledge and technology in order to make inroads.

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

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

Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
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The business has been buying the US market given that 2011, when it acquired three US firms to develop an existence in Nevada.

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

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

Mr Asher stated William Hill has actually ended up being a family name in Nevada however that's not necessarily the objective all over.

"We definitely intend to have an extremely significant brand name existence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our local partner is."

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

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