UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York
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It’s high stakes for UK firms as sports betting starts to spread in America.

From Tuesday, new guidelines on sports betting entered into effect in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The market sees a “once in a generation” chance to establish a brand-new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

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

Why the gambling market deals with an uncertain future

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But the market says relying on the US stays a dangerous bet, as UK companies face complex state-by-state regulation and competitors from established local interests.

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

‘Require time’

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

Firms are intending to tap into more of that activity after last month’s choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.
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The judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to regional legislators.

That is anticipated to result in significant variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential income ranges from $4.2 bn to practically $20bn every year depending on aspects like how many 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 big’”, stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: “I think most 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual revenue.

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

US laws restricted sports betting largely to Native American lands and Nevada’s Las Vegas strip till fairly recently.

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

States have actually also been slow to legalise numerous types of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting wagering is generally viewed in its own category, “it plainly remains to be seen whether it gets the sort of momentum individuals 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 jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he says UK firms ought to approach the market carefully, picking partners with caution and avoiding errors that might lead to regulator reaction.

“This is a chance for the American sports betting wagerer … I’m unsure whether it is a chance for company,” he states. “It actually depends on the outcome of [state] legislation and how the business operators pursue the opportunity.”

‘It will be collaborations’

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to collect a percentage of revenue as an “stability charge”.

International companies deal with the added obstacle of an effective existing gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to protect their turf.
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Analysts say UK companies will need to strike partnerships, offering their know-how and technology in order to make inroads.

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

“It will be a win-win for everybody, however it will be partnerships and it will be driven by technology,” Mr Hawkley said.
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‘It will just 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 develop an existence in Nevada.

William Hill now employs about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

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

Mr Asher stated William Hill has ended up being a family name in Nevada however that’s not always the objective everywhere.

“We definitely intend to have a very substantial brand presence in New Jersey,” he said. “In other states, it will simply depend on guideline and possibly who our regional partner is.”
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“The US is going to be the biggest sports betting wagering market in the world,” he added. “Obviously that’s not going to happen on the first day.”

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