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

5 June 2018
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By Natalie Sherman
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Business reporter, New York
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It's high stakes for UK companies as sports betting starts to spread out in America.

From Tuesday, brand-new guidelines on wagering came into impact 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 first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.

The market sees a "when in a generation" chance 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 firms, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the industry says relying on the US remains a risky bet, as UK companies deal with complex state-by-state guideline and competition from entrenched local interests.
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"It's something that we're truly focusing on, however equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US fantasy sports betting site FanDuel.

'Take some time'

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

Firms are hoping 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.

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

That is expected to result in significant variation in how firms get certified, where sports betting can take place, and which events are open to speculation - with big implications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn every year depending on aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.
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Now, he stated: "I think many people ... are taking a look at this as, 'it's an opportunity however 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in yearly profits.

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

US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip until relatively just recently.

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

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

While sports betting is generally seen in its own category, "it clearly stays to be seen whether it gets the kind of momentum individuals 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 overseas online sportsbook and served jail time.

Now a specialist, he states UK firms ought to approach the marketplace thoroughly, choosing partners with caution and avoiding missteps that might result in regulator reaction.

"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is an opportunity for organization," he states. "It truly depends on the result of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of earnings as an "stability cost".

International companies face the included obstacle of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to protect their grass.

Analysts state UK companies will require to strike collaborations, offering their competence and innovation in order to make inroads.

They point to SBTech's current announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.

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

'It will just depend'

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

The business has actually been investing in the US market because 2011, when it bought 3 US companies to establish an existence in Nevada.

William Hill now uses about 450 people in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has actually invested millions together with a local developer in a New Jersey horse racing track.

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

"We certainly plan to have a really substantial brand name presence in New Jersey," he said. "In other states, it will just depend on policy and potentially who our local partner is."

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

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