UK wagering firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

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

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

The changes are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

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

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

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But the market says counting on the US stays a risky bet, as UK business deal with complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're actually focusing on, however equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.

'Take some time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in profits last year, 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 struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

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

That is anticipated to lead to significant variation in how companies get certified, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the market.

Potential earnings varieties from $4.2 bn to almost $20bn yearly depending on elements like how numerous states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he said: "I believe many people ... are looking 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'."
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'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly earnings.

But bookmakers face a far various landscape in America than they perform in the UK, where sports betting shops are a frequent sight.

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have actually likewise been slow to legalise numerous types of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove obstacles.

While sports betting wagering is normally viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe 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 companies must approach the market carefully, selecting partners with caution and preventing mistakes that could cause regulator reaction.

"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for business," he states. "It really depends on the result of [state] legislation and how the company operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to collect a portion of earnings as an "integrity fee".

International companies face the included difficulty of an effective existing gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their turf.

Analysts state UK firms will require to strike partnerships, providing their knowledge and technology in order to make inroads.

They indicate SBTech's current announcement that it is supplying 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 everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The company has actually been buying the US market given that 2011, when it purchased 3 US companies to establish an existence in Nevada.

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

It works as danger manager 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 household name in Nevada but that's not necessarily the goal all over.
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"We definitely mean to have a very substantial brand existence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our regional partner is."

"The US is going to be the biggest sports betting market worldwide," he included. "Obviously that's not going to happen on the first day."

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