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

From Tuesday, new guidelines on wagering entered effect in Delaware, a tiny east coast state about two hours from Washington.

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

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

The market sees a “when in a generation” chance to establish a brand-new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are coming to grips with combination, increased online competition and tougher rules from UK regulators, the timing is especially appropriate.

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But the market says relying on the US stays a risky bet, as UK business deal with complex state-by-state regulation and competition from entrenched regional interests.

“It’s something that we’re truly concentrating on, but similarly we don’t wish to overhype it,” said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

‘Require time’

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

Firms are intending to take advantage of more of that activity after last month’s choice, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

The judgment 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 anticipated to result in substantial variation in how firms get certified, where sports betting can take place, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential income ranges from $4.2 bn to nearly $20bn each year depending upon aspects 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 substantial’”, said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: “I think the majority of people … are looking 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’.”
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‘Remains to be seen”
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Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, developing a market with about $6bn in annual earnings.

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

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

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

States have actually likewise been sluggish to legalise numerous kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting wagering is normally viewed in its own classification, “it clearly stays to be seen whether it gets the sort of momentum individuals think it will,” stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the former president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served prison time.

Now an expert, he states UK companies ought to approach the marketplace carefully, selecting partners with care and avoiding missteps that could cause regulator backlash.

“This is a chance for the American sports betting bettor … I’m not sure whether it is an opportunity for business,” he says. “It actually depends on the result of [state] legislation and how the business operators pursue the opportunity.”

‘It will be partnerships’

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which desire to collect a portion of earnings as an “integrity charge”.

International companies deal with the added difficulty of a powerful existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to safeguard their turf.

Analysts state UK companies will need to strike collaborations, offering their expertise and innovation in order to make inroads.

They indicate SBTech’s recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.

“It will be a for everybody, but it will be partnerships and it will be driven by innovation,” Mr Hawkley said.

‘It will simply depend’

Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
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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 uses about 450 individuals in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has actually become a home name in Nevada but that’s not always the goal all over.

“We definitely plan to have a very significant brand name presence in New Jersey,” he said. “In other states, it will simply depend on regulation and potentially who our local partner is.”

“The US is going to be the biggest sports betting market in the world,” he added. “Obviously that’s not going to take place on day one.”
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