UK sports betting firms bet on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new rules on sports betting came into impact in Delaware, a small east coast state about two hours from Washington.
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Neighbouring New Jersey might start accepting sports betting bets as early as Friday.

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

For UK firms, which are grappling with debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly suitable.

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But the market says depending on the US stays a risky bet, as UK business face complex state-by-state regulation and competition from entrenched local interests.

"It's something that we're actually concentrating on, but similarly we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
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'Take some time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming profits 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 states beyond Nevada and a few others from authorising sports betting wagering.

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

That is expected to result in significant variation in how firms get accredited, where sports betting can take place, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to nearly $20bn yearly depending on elements like the number of states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be big'", 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'."

'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, developing a market with about $6bn in annual profits.

But bookmakers deal with a far various landscape in America than they carry out in the UK, where sports betting shops are a regular sight.

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

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

States have actually likewise been sluggish to legalise lots of forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.

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

David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK companies ought to approach the marketplace carefully, picking partners with caution and preventing errors that could cause regulator backlash.
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"This is a chance for the American sports betting gambler ... I'm not sure whether it is an opportunity for company," he states. "It really is dependent on the result of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a portion of income as an "stability charge".

International companies face the added challenge of an effective existing gaming industry, with casino operators, state-run lottos and Native American people that are seeking to defend their turf.

Analysts state UK companies will require to strike partnerships, using their competence and innovation in order to make inroads.

They indicate SBTech's current announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The business has been investing in the US market because 2011, when it bought 3 US firms to establish a presence in Nevada.

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

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

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

"We certainly mean to have a really considerable brand existence in New Jersey," he said. "In other states, it will just depend upon guideline and possibly who our regional partner is."

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

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