UK Betting Firms Gamble on United States After Sports Wager Ruling

UK betting firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new rules on sports betting entered impact in Delaware, a tiny east coast state about 2 hours from Washington.

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Neighbouring New Jersey might start 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 method for states to allow sports betting wagering.

The market sees a "when in a generation" opportunity 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 grappling with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry states depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state guideline and competitors from entrenched regional interests.

"It's something that we're really focusing on, however similarly we don't desire to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently acquired the US dream sports betting website FanDuel.

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming earnings 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 choice, which struck down a 1992 federal law that disallowed 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 actually legalise sports betting wagering, leaving that concern to local legislators.

That is anticipated to lead to substantial variation in how firms get certified, where sports betting wagering can occur, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to nearly $20bn every year depending upon factors like how numerous 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 big'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I think many people ... are taking a look 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 wagering in some form by 2023, creating a market with about $6bn in yearly profits.

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

US laws minimal betting mostly to Native American lands and Nevada's Las Vegas strip till relatively recently.

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

States have actually also been slow to legalise numerous forms of online betting, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.

While sports betting is normally viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum people believe 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 former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK companies must approach the marketplace carefully, picking partners with caution and avoiding errors that could cause regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm not sure whether it is an opportunity for company," he states. "It really depends on the outcome of [state] legislation and how the organization operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which desire to gather a percentage of earnings as an "stability fee".

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

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

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

"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The business has been purchasing the US market considering that 2011, when it bought three US firms to develop a presence in Nevada.

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

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

Mr Asher stated William Hill has actually become a household name in Nevada however that's not always the goal all over.

"We certainly mean to have an extremely significant brand presence in New Jersey," he stated. "In other states, it will just depend upon policy and potentially who our local partner is."