UK Betting Firms Gamble on uS After Sports Wager Ruling

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UK wagering firms 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 firms as sports betting wagering starts to spread in America.

From Tuesday, brand-new guidelines on wagering came into effect 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 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 allow sports betting wagering.

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

For UK firms, which are grappling with combination, increased online competition and harder guidelines from UK regulators, the timing is particularly opportune.

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But the industry says counting on the US stays a dangerous bet, as UK companies face complex state-by-state guideline and competition from entrenched local interests.

"It's something that we're really focusing on, however similarly we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Take 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 intending to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

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

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

Potential profits ranges from $4.2 bn to nearly $20bn yearly depending upon aspects like how many states transfer to legalise, Oxford Economics estimated in a 2017 research 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 believe the majority of individuals ... 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in yearly earnings.

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

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

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

States have also been sluggish to legalise many types of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to remove barriers.

While sports betting wagering is typically viewed in its own classification, "it plainly stays to be seen whether it gets the sort of momentum people believe it will," stated 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 arrested in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he says UK firms must approach the marketplace thoroughly, picking partners with caution and avoiding errors that might result in regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to gather a portion of revenue as an "integrity charge".

International companies face the included obstacle of a powerful existing gaming market, with casino operators, state-run lotteries and Native American tribes that are looking for to defend their turf.

Analysts say UK companies will need to strike partnerships, using their knowledge and technology in order to make inroads.

They indicate SBTech's current statement that it is offering technology 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 everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

Joe Asher, president at William Hill US, is clear-eyed about the truths.

The business has been buying the US market considering that 2011, when it acquired 3 US firms to establish an existence in Nevada.

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

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

Mr Asher said William Hill has become a family name in Nevada but that's not necessarily the goal everywhere.

"We definitely intend to have a really substantial brand presence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our regional partner is."