UK Betting Firms Gamble on United States After Sports Wager Ruling

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

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new guidelines on wagering came into effect 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 very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

The industry sees a "when in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with combination, increased online competitors and harder guidelines from UK regulators, the timing is especially opportune.

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But the industry states counting on the US remains a risky bet, as UK business deal with complicated state-by-state regulation and competition from established local interests.

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

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external published 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 wagering.

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

That is expected to lead to significant variation in how companies get licensed, where sports betting can take place, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn every year depending on factors like how many states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe many 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 take some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual profits.

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

US laws minimal gaming 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 likewise been slow to legalise many types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting wagering is usually seen in its own classification, "it plainly stays to be seen whether it gets the type of momentum individuals think 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 previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a consultant, he states UK firms must approach the marketplace carefully, selecting partners with caution and avoiding missteps that might result in regulator backlash.

"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is a chance for service," he says. "It really depends on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to collect a percentage of income as an "integrity fee".

International companies deal with the added difficulty of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to defend their turf.

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

They indicate SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort 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 technology," Mr Hawkley stated.

'It will just depend'

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

The company has been investing in the US market because 2011, when it purchased three US companies to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually announced collaborations 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 said William Hill has actually ended up being a family name in Nevada but that's not necessarily the objective all over.

"We certainly mean to have an extremely substantial brand name presence in New Jersey," he said. "In other states, it will simply depend on guideline and potentially who our local partner is."