UK wagering companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on sports betting came into impact in Delaware, a small east coast state about two hours from Washington.
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Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
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The modifications are the 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 industry sees a "when in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who research at Davy.

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

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But the industry says counting on the US stays a risky bet, as UK business face complicated state-by-state regulation and competition from established local interests.

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

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming earnings last year, according to a report by Technavio, external published in January.
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Firms are hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.

The ruling 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 local legislators.

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

Potential earnings ranges from $4.2 bn to nearly $20bn annually depending upon elements like the number of 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'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe the majority of people ... are taking a look 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, predicts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in annual earnings.

But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a regular sight.

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

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

States have likewise been slow to legalise lots of kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting is normally seen in its own category, "it clearly stays to be seen whether it gets the type of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.
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David Carruthers is the former primary executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he states UK companies ought to approach the market carefully, choosing partners with caution and preventing bad moves that could lead to regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to collect a portion of income as an "stability cost".
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International business deal with the included obstacle of an effective existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to defend their turf.

Analysts say UK firms will need to strike collaborations, using their competence and innovation in order to make inroads.

They indicate SBTech's recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals 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'

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

The business has actually been investing in the US market because 2011, when it bought 3 US companies to establish an existence in Nevada.

William Hill now uses about 450 individuals in the US and has revealed collaborations with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has actually ended up being a home name in Nevada but that's not always the goal everywhere.

"We certainly intend to have an extremely considerable brand name existence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our local partner is."

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

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