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 firms as sports betting starts to spread out in America.

From Tuesday, brand-new rules on sports betting entered impact in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey might 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.

The market sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
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For UK firms, which are coming to grips with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly appropriate.

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

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

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

Firms are intending to use 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.

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

That is expected to lead to substantial variation in how companies get licensed, where sports betting can occur, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential income varieties from $4.2 bn to nearly $20bn yearly depending on aspects 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 big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many people ... are taking a look at this as, 'it's a chance but 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 in some type by 2023, creating a market with about $6bn in annual income.

But bookmakers face a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.

US laws minimal gambling largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.

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

States have likewise been sluggish to legalise lots of forms of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.
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While sports betting wagering is normally viewed in its own category, "it clearly stays to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.

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

Now a specialist, he states UK firms must approach the marketplace thoroughly, picking partners with care and preventing mistakes that might result in regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting wagering 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 revenue as an "stability charge".

International companies deal with the included difficulty of a powerful existing gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to protect their grass.
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Analysts say UK firms will need to strike partnerships, offering their know-how and innovation in order to make inroads.
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They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.

"It will be a win-win for everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The company has been purchasing the US market since 2011, when it acquired three US companies to develop an existence in Nevada.

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

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

Mr Asher said William Hill has ended up being a household name in Nevada however that's not always the objective everywhere.

"We definitely plan to have an extremely considerable brand name existence in New Jersey," he said. "In other states, it will simply depend upon policy and possibly who our local partner is."

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

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