UK wagering firms bet on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on wagering entered result in Delaware, a small east coast state about two hours from Washington.

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

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

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

For UK companies, which are coming to grips with consolidation, increased online competition and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the market states depending on the US stays a bet, as UK business face complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're really focusing on, but similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external published in January.

Firms are wanting to tap into more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of 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, leaving that concern to regional legislators.

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

Potential profits varieties from $4.2 bn to almost $20bn every year depending on aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 research 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 many 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in annual earnings.

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

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have also been slow to legalise lots of types of online betting, regardless of a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting is usually viewed in its own category, "it clearly stays to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the former primary executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.

Now an expert, he states UK firms ought to approach the marketplace thoroughly, choosing partners with caution and avoiding bad moves that could lead to regulator backlash.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for company," he says. "It actually depends on the result of [state] legislation and how the service operators pursue the opportunity."

'It will be partnerships'

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

International companies face the added challenge of an effective existing video gaming market, with casino operators, state-run lottery games and Native American people that are seeking to safeguard their turf.

Analysts state UK firms will require to strike partnerships, offering their competence and technology in order to make inroads.
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They point to SBTech's current announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
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"It will be a win-win for everybody, however it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The business has been buying the US market because 2011, when it acquired 3 US firms to develop a presence in Nevada.
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William Hill now uses about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

It works as danger manager for the Delaware Lottery and has actually invested millions alongside a regional developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not necessarily the objective all over.

"We certainly intend to have a very substantial brand existence in New Jersey," he said. "In other states, it will simply depend upon policy 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 the first day."

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