UK Betting Firms Gamble on United States After Sports Wager Ruling

UK wagering companies gamble 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 starts to spread out in America.

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

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

The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.

The market sees a "once in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are coming to grips with debt consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly opportune.

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But the industry states counting on the US remains a dangerous bet, as UK business face complicated state-by-state policy and competitors from established local interests.

"It's something that we're really focusing on, but similarly we do not desire to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently purchased 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 last year, according to a report by Technavio, external published in January.

Firms are wishing 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 couple of others from authorising sports betting wagering.

The judgment 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 anticipated to cause considerable variation in how companies get licensed, where sports betting can happen, and which events are open to speculation - with big implications for the size of the market.

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending on elements like how numerous 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'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe the majority of 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in yearly profits.

But bookies deal with a far various landscape in America than they do in the UK, where wagering stores are a regular sight.

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US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have likewise been slow to legalise lots of forms of online gambling, despite a 2011 Justice Department opinion that appeared to remove barriers.

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

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

Now a consultant, he says UK firms should approach the marketplace carefully, selecting partners with caution and avoiding errors that might cause regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to gather a percentage of earnings as an "stability fee".

International business deal with the added obstacle of a powerful existing video gaming market, with gambling establishment operators, state-run lotteries and Native American people that are seeking to defend their grass.

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

They indicate SBTech's current statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers 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, president at William Hill US, is clear-eyed about the truths.

The company has actually been purchasing the US market considering that 2011, when it purchased 3 US companies to establish an existence in Nevada.

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

It works as threat manager for the Delaware Lottery and has invested millions together with a local 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 substantial brand presence in New Jersey," he stated. "In other states, it will simply depend on policy and possibly who our local partner is."