UK wagering firms gamble 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 wagering starts to spread in America.

From Tuesday, new rules on wagering entered into impact in Delaware, a small east coast state about 2 hours from Washington.

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

The changes 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 allow sports betting wagering.

The industry sees a "once in a generation" chance to establish a brand-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 competition and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry says counting on the US stays a dangerous bet, as UK business deal with complex state-by-state regulation and competitors from established local interests.

"It's something that we're actually concentrating on, however similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US dream sports betting site FanDuel.

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, according to a report by Technavio, external released in January.

Firms are wanting to use 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 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 expected to lead to significant variation in how companies get accredited, where sports betting can occur, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential earnings varieties from $4.2 bn to practically $20bn annually depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 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 experts KPMG.

Now, he stated: "I believe many people ... are looking at this as, 'it's a chance but 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"

Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in yearly profits.

But bookmakers face a far different landscape in America than they carry out in the UK, where betting shops are a regular sight.

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip till reasonably just 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 lots of forms of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

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

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

Now a consultant, he says UK firms need to approach the marketplace thoroughly, picking partners with care and preventing bad moves that might cause 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 truly is dependent on the outcome of [state] legislation and how the company operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of revenue as an "stability fee".

International companies face the added difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their grass.

Analysts say UK companies will need to strike partnerships, providing their know-how and technology in order to make inroads.

They indicate SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most 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 stated.

'It will just depend'

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

The business has actually been buying the US market given that 2011, when it purchased three US companies to establish a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has actually invested millions along with a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually ended up being a home name in Nevada however that's not always the goal all over.

"We certainly intend to have a very significant brand existence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our local partner is."

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

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