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

5 June 2018

By Natalie Sherman
bit.ly
Business reporter, New york city

It's high stakes for UK firms as sports betting starts to spread out in America.
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From Tuesday, brand-new rules on sports betting came into result in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.

The market sees a "as soon as 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.

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

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But the market says counting on the US remains a risky bet, as UK business face state-by-state guideline and competition from established local interests.

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

'Take time'

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

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

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

That is expected to lead to significant variation in how companies get accredited, where sports betting wagering can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential profits ranges from $4.2 bn to nearly $20bn annually depending on factors like how many states transfer 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'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
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Now, he stated: "I believe the majority of people ... are looking at this as, 'it's a chance 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, forecasts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in yearly revenue.

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

US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have actually also been slow to legalise many forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.
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While sports betting wagering is typically viewed in its own category, "it clearly stays to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

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

Now a specialist, he states UK companies must approach the market carefully, choosing partners with care and preventing mistakes that could result in regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is a chance for business," he states. "It truly depends on the result of [state] legislation and how the organization operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a portion of revenue as an "integrity cost".

International companies deal with the included challenge of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American people that are looking for to defend their grass.

Analysts say UK companies will require to strike partnerships, offering their know-how and innovation in order to make inroads.

They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.

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

'It will simply depend'

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

The business has actually been investing in the US market because 2011, when it bought 3 US companies to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.
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It works as danger supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a household name in Nevada however that's not necessarily the goal all over.

"We definitely intend to have a very substantial brand name existence in New Jersey," he stated. "In other states, it will just depend upon regulation and possibly who our regional partner is."

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

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