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

5 June 2018

By Natalie Sherman

Business reporter, New York

It's high stakes for UK companies as sports betting wagering starts to spread in America.
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From Tuesday, brand-new rules on sports betting entered into effect in Delaware, a small east coast state about 2 hours from Washington.

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

The modifications 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 permit sports betting.

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

For UK firms, which are coming to grips with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is particularly opportune.

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But the industry says counting on the US remains a risky bet, as UK companies face complicated state-by-state policy and competitors from entrenched regional interests.

"It's something that we're really concentrating on, but similarly we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

'Take some time'

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

Firms are wishing to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of 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 anticipated to cause substantial variation in how firms get licensed, where sports betting wagering can happen, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential income varieties from $4.2 bn to practically $20bn every year depending upon elements like the number of states relocate 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 big'", said Will Hawkley, London-based head of leisure for specialists 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, anticipates that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual earnings.

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

US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip till fairly just recently.
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In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.

States have actually likewise been slow to legalise lots of forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to remove barriers.

While sports betting wagering is typically seen in its own classification, "it plainly stays to be seen whether it gets the kind of think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
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David Carruthers is the former 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 says UK firms ought to approach the marketplace thoroughly, selecting partners with caution and avoiding errors that could result in regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm not sure whether it is an opportunity for service," he states. "It actually is dependent on the outcome of [state] legislation and how the business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of income as an "integrity cost".

International business deal with the added challenge of a powerful existing gaming market, with casino operators, state-run lottos and Native American people that are seeking to protect their grass.

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

They point to SBTech's recent announcement that it is supplying innovation 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 just depend'

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

The company has been purchasing the US market given that 2011, when it acquired 3 US firms to develop an existence in Nevada.
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William Hill now utilizes about 450 individuals 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 actually invested millions along with a local developer in a New Jersey horse racing track.

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

"We definitely plan to have a really considerable brand existence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our regional partner is."

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

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