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

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on wagering came into impact 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 modifications are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The market sees a "once in a generation" chance to establish a brand-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 rules from UK regulators, the timing is particularly opportune.

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But the industry says counting on the US remains a risky bet, as UK companies deal with complex state-by-state guideline and competition from established regional interests.

"It's something that we're truly focusing on, however equally we don't wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

'Require time'

The US represented 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 wanting to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a few 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 concern to local legislators.

That is expected to cause significant variation in how companies get certified, where sports betting wagering can take place, and which occasions are open to speculation - with big implications for the size of the market.

Potential profits varieties from $4.2 bn to nearly $20bn every year depending on aspects like the number of 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 huge'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe many people ... are looking at this as, 'it's an opportunity however 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 form by 2023, developing a market with about $6bn in annual income.

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

US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

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

States have actually also been sluggish to legalise many types of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting is normally seen in its own classification, "it plainly 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 previous president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he states UK companies need to approach the market carefully, picking partners with care and avoiding mistakes that could lead to regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm not sure whether it is an opportunity for service," he says. "It actually is reliant on the result of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which want to collect a portion of revenue as an "stability fee".

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

Analysts say UK firms will need to strike partnerships, providing their expertise and technology in order to make inroads.

They indicate SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.

"It will be a win-win for everyone, however it will be collaborations and it will be driven by technology," 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 3 US firms to establish a presence in Nevada.

William Hill now employs about 450 people in the US and has revealed collaborations with casinos in Iowa and New Jersey.

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

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

"We definitely plan to have a very considerable brand existence in New Jersey," he said. "In other states, it will just depend upon guideline and possibly who our regional partner is."

"The US is going to be the most significant sports betting wagering market on the planet," he added. "Obviously that's not going to take place on day one."

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