UK Betting Firms Gamble on United States After Sports Wager Ruling

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UK wagering firms bet on US after sports wager judgment

UK wagering firms bet on US after sports betting wager ruling

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5 June 2018


By Natalie Sherman


Business reporter, New York


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


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


Neighbouring New Jersey could 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 method for states to enable sports betting wagering.


The industry sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.


For UK companies, which are grappling with combination, increased online competition and tougher guidelines from UK regulators, the timing is especially suitable.


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But the industry states counting on the US stays a risky bet, as UK companies deal with complicated state-by-state regulation and competition from established regional interests.


"It's something that we're actually concentrating on, however equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired 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 in 2015, according to a report by Technavio, external released in January.


Firms are wanting to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a couple of 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 lawmakers.


That is expected to lead to substantial variation in how companies get certified, where sports betting can take place, and which occasions are open to speculation - with huge ramifications for the size of the market.


Potential profits varieties from $4.2 bn to nearly $20bn each year depending on factors like the number of states move 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 big'", said Will Hawkley, London-based head of leisure for specialists KPMG.


Now, he said: "I believe the majority of people ... are taking a look 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 take some time'."


'Remains to be seen"


Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in yearly income.


But bookies deal with a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.


US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip up until fairly recently.


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

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States have also been slow to legalise lots of forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove barriers.


While sports betting wagering is normally viewed in its own category, "it clearly remains to be seen whether it gets the type of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.


David Carruthers is the previous primary executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.


Now a specialist, he says UK companies should approach the marketplace carefully, choosing partners with caution and preventing missteps that might lead to regulator reaction.


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


'It will be collaborations'

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As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which desire to collect a portion of profits as an "integrity fee".


International business deal with the added obstacle of a powerful existing gaming industry, with casino operators, state-run lottery games and Native American people that are seeking to safeguard their grass.


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


They point to SBTech's current announcement that it is supplying 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, chief executive at William Hill US, is clear-eyed about the realities.


The company has actually been buying the US market since 2011, when it acquired 3 US firms to develop a presence in Nevada.


William Hill now employs about 450 individuals in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.


It works as risk manager for the Delaware Lottery and has invested millions along with a regional developer 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 really substantial brand presence 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 greatest sports betting market on the planet," he included. "Obviously that's not going to occur on the first day."


More on this story


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