UK Betting Firms Gamble on uS After Sports Wager Ruling

UK wagering firms bet 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 out in America.

From Tuesday, new guidelines on sports betting entered into result 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 first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The industry sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

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

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But the market says relying on the US stays a dangerous bet, as UK companies deal with complicated state-by-state policy and competition from established regional interests.

"It's something that we're truly focusing on, but similarly we do not wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming income 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 disallowed states beyond Nevada and a couple of others from authorising sports betting.

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

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

Potential profits ranges from $4.2 bn to almost $20bn annually depending on factors like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I believe many people ... are taking a look 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 require time'."

'Remains to be seen"

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

But bookmakers face a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.

US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip until fairly recently.

In the popular imagination, 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 lots of forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

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

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

Now an expert, he says UK companies ought to approach the marketplace thoroughly, picking partners with caution and preventing bad moves that could lead to regulator reaction.

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

'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which desire to collect a portion of revenue as an "stability charge".

International business deal with the included difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to protect their turf.

Analysts state UK firms will require to strike collaborations, using their expertise and innovation in order to make inroads.

They point to SBTech's current statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most 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 stated.

'It will just depend'

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

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

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

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

Mr Asher stated William Hill has actually become a home name in Nevada but that's not necessarily the objective everywhere.

"We certainly plan to have a really substantial brand existence in New Jersey," he said. "In other states, it will simply depend on policy and possibly who our regional partner is."