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

5 June 2018

By Natalie Sherman

Business reporter, New york city

It's high stakes for UK companies as sports betting wagering starts to spread in America.

From Tuesday, new rules on wagering entered into result in Delaware, a small east coast state about two 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 method for states to enable sports betting.

The market sees a "once in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing consolidation, increased online competition and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the market says relying on the US stays a dangerous bet, as UK business deal with complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're truly focusing on, however similarly we don't wish to overhype it," stated James Midmer, spokesperson 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 video gaming earnings last year, according to a report by Technavio, external released in January.

Firms are intending 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 judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.

That is anticipated to result in substantial variation in how companies get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with big implications for the size of the market.

varieties from $4.2 bn to practically $20bn annually depending upon factors like the number of states transfer to legalise, Oxford Economics approximated in a 2017 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 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 time'."
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'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in yearly revenue.

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 till fairly recently.

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

States have actually likewise been slow to legalise many forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate obstacles.
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While sports betting wagering is normally seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.

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

Now a consultant, he states UK companies should approach the market carefully, selecting partners with care and avoiding mistakes that could cause regulator backlash.
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"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for service," he says. "It truly is reliant on the result of [state] legislation and how the organization operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to collect a percentage of revenue as an "stability fee".

International companies face the added obstacle of a powerful existing video gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

Analysts say UK companies will require to strike collaborations, offering their knowledge and technology in order to make inroads.

They point to SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.

"It will be a win-win for everybody, however it will be partnerships 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 buying the US market given that 2011, when it bought three US companies to develop an existence in Nevada.

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

It works as danger manager for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a home name in Nevada however that's not always the objective everywhere.

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

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

More on this story

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