UK wagering companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new rules on wagering came into impact in Delaware, a small east coast state about two hours from Washington.

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

The changes 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 wagering.

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

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

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But the industry says counting on the US stays a dangerous bet, as UK companies deal with complex state-by-state regulation and competition from established local interests.

"It's something that we're actually focusing on, but equally we don't wish to overhype it," said 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 video gaming profits in 2015, according to a report by Technavio, external published in January.

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

The ruling discovered the law was an over-reach of federal power. But the court it did not really wagering, leaving that concern to local lawmakers.

That is anticipated to result in significant variation in how firms get licensed, 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 almost $20bn yearly depending on aspects like how lots of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I believe 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, forecasts that 32 states will legalise sports betting in some form by 2023, producing a market with about $6bn in annual income.

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

US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip till relatively just recently.

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

States have actually likewise been sluggish to legalise lots of types of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to remove challenges.

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

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

Now an expert, he states UK companies ought to approach the market thoroughly, selecting partners with caution and preventing errors that could result in regulator backlash.
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"This is a chance for the American sports betting bettor ... I'm uncertain whether it is a chance for service," he says. "It really depends on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a portion of profits as an "stability charge".

International business face the included challenge of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to safeguard their grass.

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

They point to SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.

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

'It will simply depend'
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Joe Asher, president at William Hill US, is clear-eyed about the truths.

The business has actually been purchasing the US market considering that 2011, when it purchased 3 US firms to establish an existence in Nevada.

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

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

Mr Asher stated William Hill has become a household name in Nevada however that's not necessarily the objective everywhere.

"We definitely mean to have an extremely significant brand name existence in New Jersey," he stated. "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 added. "Obviously that's not going to take place on day one."
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