UK Betting Firms Gamble on United States After Sports Wager Ruling

UK wagering 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 starts to spread in America.

From Tuesday, new rules on wagering came into effect in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

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

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

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But the industry states relying on the US stays a risky bet, as UK companies face complex state-by-state guideline and competitors from established local interests.

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

'Take some 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 released in January.

Firms are hoping to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few 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 wagering, leaving that concern to local legislators.

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

Potential profits varieties from $4.2 bn to almost $20bn annually depending on aspects like the number of states transfer to legalise, Oxford Economics estimated 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 consultants KPMG.

Now, he stated: "I believe the majority of 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, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in yearly profits.

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

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

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

States have also been slow to legalise many kinds of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to eliminate barriers.

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

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

Now a specialist, he states UK firms ought to approach the market carefully, choosing partners with care and preventing missteps that could lead to regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which desire to gather a percentage of profits as an "integrity charge".

International business deal with the included obstacle of an effective existing gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to safeguard their turf.

Analysts state UK companies will require to strike partnerships, using their knowledge and technology in order to make inroads.

They indicate SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

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

'It will simply depend'

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

The company has actually been purchasing the US market because 2011, when it purchased three US firms to develop a presence in Nevada.

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

It works as risk supervisor for the Delaware Lottery and has actually invested millions alongside a local designer 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 necessarily the goal all over.

"We certainly intend to have an extremely considerable brand name presence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our local partner is."

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

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