UK wagering companies 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 firms as sports betting wagering starts to spread out in America.

From Tuesday, brand-new rules on wagering entered into impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey might start accepting as early as Friday.

The modifications are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The industry sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
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For UK firms, which are grappling with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially suitable.

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But the industry says counting on the US stays a risky bet, as UK companies face complex state-by-state guideline and competition from entrenched regional interests.

"It's something that we're truly concentrating on, however similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, 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 decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.
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The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local legislators.

That is expected to cause substantial variation in how firms get licensed, where sports betting 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 nearly $20bn annually depending upon elements like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I think most people ... are looking at this as, 'it's a chance 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, anticipates that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in yearly revenue.
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But bookies deal with a far different landscape in America than they do in the UK, where sports betting stores are a frequent sight.

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

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

States have actually likewise been slow to legalise many kinds of online sports betting, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.

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

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

Now an expert, he says UK companies must approach the marketplace thoroughly, choosing partners with caution and avoiding missteps that might cause regulator backlash.

"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for organization," he says. "It actually depends on the result of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to gather a percentage of revenue as an "stability cost".

International business deal with the added obstacle of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American people that are seeking to safeguard their grass.

Analysts state UK firms will need to strike collaborations, using their know-how and innovation in order to make inroads.

They point to SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.

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

'It will simply depend'

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

The company has actually been purchasing the US market considering that 2011, when it acquired three US firms to establish a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a home name in Nevada however that's not always the goal all over.

"We definitely plan to have a really significant brand existence in New Jersey," he said. "In other states, it will just depend upon regulation and potentially who our local partner is."

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

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