UK wagering companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman
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Business press reporter, New york city

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

From Tuesday, brand-new guidelines on wagering entered into result 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 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 brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are grappling with combination, increased online competition and tougher guidelines from UK regulators, the timing is especially opportune.

Why the sports betting industry deals with an uncertain future

How does prohibited sports betting work and what are the worries?

But the market says depending on the US remains a risky bet, as UK business deal with complex state-by-state policy and competitors from entrenched local interests.
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"It's something that we're truly focusing on, but equally we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.

'Take time'

The US accounted for about 23% of the $244bn (₤ 182bn) in video gaming revenue 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 choice, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
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The ruling 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 legislators.

That is anticipated to cause significant variation in how firms get certified, where sports betting wagering can happen, and which events are open to speculation - with huge ramifications for the size of the market.

Potential income varieties from $4.2 bn to practically $20bn annually depending on elements like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
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"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many individuals ... 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"
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Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in yearly profits.
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But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a regular sight.

US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip up until relatively just recently.

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

States have also been slow to legalise numerous types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to remove barriers.

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

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

Now an expert, he says UK firms ought to approach the market carefully, selecting partners with caution and preventing bad moves that might lead to regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to collect a percentage of earnings as an "integrity charge".

International companies face the added difficulty of an effective existing gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to protect their turf.

Analysts state UK firms will require to strike collaborations, using their expertise and technology in order to make inroads.

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

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

'It will simply depend'

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

The company has been buying the US market because 2011, when it acquired three US companies to develop a presence in Nevada.

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

It works as danger supervisor for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.
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Mr Asher said William Hill has become a home name in Nevada however that's not necessarily the goal everywhere.

"We certainly plan to have a really considerable brand name 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 greatest sports betting market on the planet," he included. "Obviously that's not going to take place on the first day."

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