UK Betting Firms Gamble on uS After Sports Wager Ruling

UK sports betting firms bet on US after sports betting wager judgment

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5 June 2018

By Natalie Sherman

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

From Tuesday, brand-new guidelines on sports betting came into impact in Delaware, a tiny east coast state about two hours from Washington.

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

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

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

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

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

"It's something that we're actually concentrating on, but equally we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external published in January.

Firms are wishing to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.

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

That is anticipated to lead to significant variation in how companies get certified, where sports betting wagering can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential earnings varieties from $4.2 bn to nearly $20bn each year depending upon aspects like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I think the majority of 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 take some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in annual income.

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

US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have also been slow to legalise lots of forms of online sports betting, despite a 2011 Justice Department opinion that appeared to remove obstacles.

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

David Carruthers is the previous chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he says UK companies need to approach the market thoroughly, choosing partners with care and preventing bad moves that could result in regulator reaction.

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

'It will be partnerships'

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

International business deal with the added difficulty of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to protect their turf.

Analysts say UK firms will need to strike partnerships, using their expertise and technology in order to make inroads.

They indicate SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers 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, chief executive at William Hill US, is clear-eyed about the realities.

The company has actually been investing in the US market considering that 2011, when it acquired three US companies to establish an existence in Nevada.

William Hill now uses about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.

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

"We definitely plan to have a very substantial brand name presence in New Jersey," he said. "In other states, it will just depend upon policy and possibly who our regional partner is."

"The US is going to be the most significant sports betting market in the world," he included. "Obviously that's not going to occur on day one."