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

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new rules on sports betting entered into impact in Delaware, a tiny east coast state about two hours from Washington.

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

The changes are the very first in what might 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 "once in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with debt consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly appropriate.

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But the industry states depending on the US remains a dangerous bet, as UK business face complex state-by-state guideline and competitors from established local interests.

"It's something that we're actually focusing on, however similarly we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

'Take some time'

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

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

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

That is anticipated to cause considerable variation in how companies get certified, where sports betting can occur, and which events are open to speculation - with huge implications for the size of the marketplace.

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

"There was a lot of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many people ... are looking at this as, 'it's an opportunity 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 in some type by 2023, creating a market with about $6bn in annual profits.

But bookmakers deal with a far various landscape in America than they do in the UK, where sports betting shops are a frequent sight.

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

In the popular creativity, sports betting has actually long been linked 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 opinion that appeared to get rid of obstacles.

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

David Carruthers is the former president 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 companies must approach the marketplace carefully, picking partners with care and preventing bad moves that could result in 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 actually is reliant on the result of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to gather a percentage of earnings as an "integrity charge".

International business deal with the included difficulty of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American people that are seeking to defend their turf.

Analysts state UK companies will require to strike collaborations, using their know-how and technology in order to make inroads.

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

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

'It will just depend'

Joe Asher, chief 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 a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a household name in Nevada however that's not always the objective all over.

"We definitely mean to have a really considerable brand existence in New Jersey," he said. "In other states, it will simply depend upon guideline and possibly who our local partner is."

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

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