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 companies as sports betting wagering starts to spread out in America.

From Tuesday, new guidelines on sports betting entered into impact in Delaware, a small east coast state about 2 hours from Washington.
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Neighbouring New Jersey could begin 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 wagering.

The industry sees a "as soon as in a generation" chance to develop a brand-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 coming to grips with combination, increased online competitors and tougher rules from UK regulators, the timing is especially opportune.

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

"It's something that we're actually concentrating on, however similarly we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which 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 profits in 2015, according to a report by Technavio, external released in January.

Firms are intending to use more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.

The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to local legislators.

That is anticipated to lead to substantial variation in how firms get certified, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the market.

Potential earnings ranges from $4.2 bn to almost $20bn every year depending on factors like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", stated 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 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, predicts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in annual profits.

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

US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip till reasonably recently.

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

States have also been slow to legalise numerous forms of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate obstacles.

While sports betting is normally seen in its own category, "it plainly remains to be seen whether it gets the type of momentum individuals believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

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

Now a specialist, he says UK firms should approach the market thoroughly, selecting partners with caution and preventing errors that might lead to regulator reaction.

"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is a chance for service," he states. "It really depends on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which desire to gather a percentage of revenue as an "stability charge".

International business face the included obstacle of an effective existing gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to safeguard their grass.

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

They indicate SBTech's current announcement that it is offering 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 everybody, however it will be collaborations 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 truths.

The business has been buying the US market given that 2011, when it purchased three US companies to develop a presence in Nevada.
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William Hill now employs about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has actually become a home name in Nevada however that's not necessarily the objective everywhere.

"We certainly mean to have a very substantial brand name presence in New Jersey," he stated. "In other states, it will just depend upon policy and possibly who our local partner is."

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

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