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UK sports betting companies bet on US after sports betting wager judgment

5 June 2018
bit.ly
By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new rules on wagering entered result in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring New Jersey might begin 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 way for states to enable sports betting .

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

For UK firms, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially appropriate.
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But the market states depending on the US stays a dangerous bet, as UK business deal with complicated state-by-state policy and competition from established local interests.

"It's something that we're actually concentrating on, but equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.

'Take time'

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

Firms are wanting to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting.

The judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local lawmakers.

That is expected to lead to substantial variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to almost $20bn each 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 great deal 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 taking a look 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, anticipates that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in annual revenue.

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

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until reasonably recently.
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In the popular creativity, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.

States have likewise been slow to legalise many forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate barriers.

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

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

Now a consultant, he states UK companies must approach the market thoroughly, selecting partners with caution and preventing mistakes that might lead to regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to gather a portion of income as an "integrity fee".
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International business face the added challenge of a powerful existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their turf.

Analysts state UK firms will require to strike collaborations, offering their expertise and technology in order to make inroads.

They indicate SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind 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 technology," Mr Hawkley said.

'It will simply depend'

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

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

William Hill now employs about 450 individuals in the US and has revealed collaborations with casinos in Iowa and New Jersey.

It works as danger supervisor for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a household name in Nevada however that's not necessarily the objective all over.

"We certainly intend to have a really significant brand name existence in New Jersey," he said. "In other states, it will just depend upon regulation and possibly who our regional partner is."
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"The US is going to be the most significant sports betting wagering market on the planet," he included. "Obviously that's not going to happen on the first day."

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