UK wagering companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new guidelines on wagering entered impact 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 changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

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

For UK companies, which are coming to grips with combination, increased online competitors and tougher guidelines from UK regulators, the timing is especially appropriate.

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But the industry states counting on the US stays a risky bet, as UK companies face complicated state-by-state guideline and competitors from entrenched regional interests.

"It's something that we're actually concentrating on, however similarly we don't wish to overhype it," stated James Midmer, spokesman at Betfair, which just recently bought the US dream sports betting site FanDuel.

'Take some 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 wishing to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of 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, leaving that question to regional legislators.

That is anticipated to result in considerable variation in how firms get certified, where sports betting wagering can happen, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.
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Potential revenue ranges from $4.2 bn to practically $20bn annually depending on factors like the number of states transfer to legalise, Oxford Economics approximated 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 consultants KPMG.

Now, he said: "I believe 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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in yearly revenue.

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

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip till relatively just recently.
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In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.

States have also been slow to legalise lots of types of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate barriers.
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While sports betting wagering is normally seen in its own classification, "it plainly stays to be seen whether it gets the sort of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.

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

Now a specialist, he states UK companies must approach the marketplace thoroughly, picking partners with care and preventing mistakes that could lead to regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which desire to gather a percentage of profits as an "stability cost".
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International companies deal with the added obstacle of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their turf.

Analysts say UK companies will need to strike partnerships, offering their competence and innovation in order to make inroads.

They point to SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.

"It will be a win-win for everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will simply depend'
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Joe Asher, president at William Hill US, is clear-eyed about the realities.

The company has actually been investing in the US market given that 2011, when it bought three US companies to establish a presence in Nevada.

William Hill now utilizes about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has become a family name in Nevada but that's not necessarily the goal all over.
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"We definitely intend to have a very considerable brand presence in New Jersey," he said. "In other states, it will just depend on policy and potentially who our regional partner is."

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

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