UK wagering companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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 wagering entered impact 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 modifications are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

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

For UK firms, which are grappling with consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly suitable.
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But the market says counting on the US stays a risky bet, as UK companies deal with complex state-by-state policy and competitors from established local interests.

"It's something that we're truly focusing on, however similarly we do not want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting website 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, in January.

Firms are wanting to use more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.

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

That is anticipated to result in significant variation in how firms get accredited, where sports betting can happen, and which events are open to speculation - with huge implications for the size of the market.

Potential revenue ranges from $4.2 bn to practically $20bn annually depending on elements like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for experts KPMG.
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Now, he stated: "I believe many 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 require time'."

'Remains to be seen"
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Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in annual earnings.

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

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have likewise been sluggish to legalise lots of types of online gambling, despite a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting wagering is generally seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.

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

Now an expert, he says UK companies need to approach the market carefully, choosing partners with care and preventing mistakes that might cause regulator reaction.

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

'It will be partnerships'

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

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

Analysts state UK firms will require to strike partnerships, offering their proficiency and technology in order to make inroads.

They point to SBTech's recent 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 everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The business has actually been investing in the US market given that 2011, when it acquired 3 US companies to develop a presence in Nevada.
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William Hill now uses about 450 individuals in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.

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

"We certainly intend to have an extremely significant brand presence in New Jersey," he stated. "In other states, it will simply depend on guideline and potentially who our local partner is."

"The US is going to be the greatest sports betting wagering market on the planet," he included. "Obviously that's not going to occur on day one."

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