UK Betting Firms Gamble on United States After Sports Wager Ruling

UK wagering companies gamble on US after sports betting wager ruling

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5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on wagering came into result in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could start 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 method for states to permit sports betting.

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

For UK firms, 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 relying on the US remains a dangerous bet, as UK companies deal with complicated state-by-state regulation and competitors from established local interests.

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

'Take time'

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

Firms are intending to use more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.

The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional lawmakers.

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

Potential revenue ranges from $4.2 bn to almost $20bn each year depending upon factors like how many states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I think many people ... are taking a look at this as, 'it's an opportunity but 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in annual revenue.

But bookmakers face a far different landscape in America than they do in the UK, where sports betting stores are a frequent sight.

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

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

States have actually likewise 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 typically seen in its own category, "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 wagering guideline.

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

Now a consultant, he states UK companies should approach the marketplace carefully, selecting partners with care and preventing missteps that might cause regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is an opportunity for organization," he states. "It really is reliant on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which desire to collect a percentage of earnings as an "stability cost".

International companies face the added challenge of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to defend their turf.

Analysts say UK firms will require to strike collaborations, offering their knowledge and technology in order to make inroads.

They point to SBTech's recent announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of deals 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 stated.

'It will just depend'

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

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

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

It works as risk manager for the Delaware Lottery and has actually invested millions along with a regional developer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually become a household name in Nevada but that's not always the goal everywhere.

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