UK wagering firms bet on US after sports betting wager ruling


5 June 2018


By Natalie Sherman


Business press reporter, New York


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


From Tuesday, new rules on wagering entered result 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 could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.


The market sees a "as soon as in a generation" opportunity to establish 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 facing consolidation, increased online competition and tougher rules from UK regulators, the timing is especially appropriate.


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But the market states relying on the US remains a dangerous bet, as UK business deal with complex state-by-state policy and competition 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 recently acquired the US fantasy sports betting website FanDuel.


'Take time'


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


Firms are hoping to take advantage of more of that activity after last month's decision, which overruled 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 question to regional legislators.


That is expected to cause considerable variation in how firms get licensed, where sports betting can occur, and which events are open to speculation - with huge ramifications for the size of the market.


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


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


Now, he said: "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 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 kind by 2023, producing a market with about $6bn in yearly revenue.


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


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


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


States have actually likewise been slow to legalise numerous types of online gaming, regardless of a 2011 Justice Department opinion that appeared to get rid of challenges.


While sports betting is typically seen in its own classification, "it clearly remains to be seen whether it gets the type 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 apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.


Now a consultant, he states UK companies need to approach the marketplace thoroughly, selecting partners with care and preventing errors that might cause regulator backlash.


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


'It will be collaborations'


As legalisation starts, sports betting companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to collect a percentage of earnings as an "integrity charge".


International companies deal with the added obstacle of an effective existing video gaming market, with casino operators, state-run lotteries and Native American people that are seeking to protect their grass.


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


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


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


'It will just depend'


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


The business has been investing in the US market because 2011, when it acquired 3 US companies to develop an existence in Nevada.


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


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


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


"We definitely plan to have a very considerable brand name presence in New Jersey," he said. "In other states, it will simply depend upon policy and potentially who our regional partner is."


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




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