UK wagering firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

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

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

The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.

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

For UK firms, which are grappling with combination, increased online competition and tougher guidelines from UK regulators, the timing is particularly appropriate.

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But the industry says counting on the US remains a risky bet, as UK business deal with complicated state-by-state guideline and competition from established local interests.

"It's something that we're actually concentrating on, however equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US dream sports betting website 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 published in January.

Firms are intending to tap into more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.

The ruling found 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 lawmakers.

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

Potential earnings ranges from $4.2 bn to nearly $20bn annually depending on aspects like how many states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I believe the majority of people ... are looking at this as, 'it's an opportunity however 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 wagering in some kind by 2023, developing a market with about $6bn in yearly revenue.

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

US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

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

States have actually also been sluggish to legalise many forms of online gambling, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting is typically seen in its own classification, "it plainly remains to be seen whether it gets the type of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now a consultant, he states UK companies ought to approach the market carefully, selecting partners with caution and avoiding missteps that could cause regulator backlash.

"This is a chance for the American sports betting bettor ... I'm not exactly sure whether it is a chance for service," he says. "It really depends on the outcome of [state] legislation and how the organization operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which want to gather a percentage of income as an "stability fee".

International companies face the included difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are seeking to defend their turf.

Analysts say UK companies will require to strike partnerships, providing their know-how and technology in order to make inroads.

They indicate SBTech's recent announcement that it is offering 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 technology," Mr Hawkley stated.

'It will just depend'

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

The company has been purchasing the US market given that 2011, when it acquired 3 US companies to develop a presence in Nevada.

William Hill now employs about 450 individuals 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 alongside a regional developer in a New Jersey horse racing track.

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

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

"The US is going to be the most significant sports betting market in the world," he added. "Obviously that's not going to occur on day one."

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