UK sports betting firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new guidelines on wagering entered into effect in Delaware, a small 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 might become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

The market sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are coming to grips with debt consolidation, increased online competition and from UK regulators, the timing is especially appropriate.

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But the market states relying on the US remains a dangerous bet, as UK business face complex state-by-state guideline and competition from established regional interests.

"It's something that we're truly focusing on, however similarly we do not desire to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

'Take time'

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

Firms are hoping to tap into more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting wagering.

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

That is expected to result in substantial variation in how companies get accredited, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the market.

Potential earnings ranges from $4.2 bn to practically $20bn yearly depending on elements like how numerous states relocate 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 substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe many people ... 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 require time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual income.

But bookies face a far various landscape in America than they do in the UK, where wagering stores are a regular sight.

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

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

States have likewise been sluggish to legalise lots of types of online gambling, despite a 2011 Justice Department opinion that appeared to eliminate barriers.

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

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 an expert, he says UK companies ought to approach the market carefully, choosing partners with caution and avoiding missteps that could result in regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to collect a portion of income as an "integrity charge".

International companies deal with the included challenge of a powerful existing gaming market, with casino operators, state-run lottery games and Native American people that are seeking to protect their grass.

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

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

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

'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 considering that 2011, when it bought three US firms to establish a presence in Nevada.

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

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

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

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

"The US is going to be the biggest sports betting wagering market on the planet," he added. "Obviously that's not going to occur on day one."

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