UK Betting Firms Gamble on United States After Sports Wager Ruling

UK wagering companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

reporter, New york city

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

From Tuesday, new guidelines on sports betting entered into effect in Delaware, a tiny east coast state about 2 hours from Washington.

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

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

The market sees a “when 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 at Davy.

For UK companies, which are coming to grips with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.

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But the industry says counting on the US remains a dangerous bet, as UK companies deal with complex state-by-state policy and competition from established regional interests.

“It’s something that we’re actually focusing on, however equally we don’t want to overhype it,” stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.

‘Take some time’

The US represented about 23% of the world’s $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external released in January.

Firms are wishing to take advantage of 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 ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to local legislators.

That is anticipated to result in significant variation in how firms get accredited, where sports betting can take place, and which events are open to speculation – with big ramifications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to almost $20bn every year depending on factors like how many states transfer to legalise, Oxford Economics approximated in a 2017 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 experts KPMG.

Now, he said: “I think the majority of people … 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 require time’.”

‘Remains to be seen”

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in yearly income.

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

US laws restricted gambling mostly to Native American lands and Nevada’s Las Vegas strip up until reasonably recently.

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

States have actually also been slow to legalise many types of online sports betting, despite a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting is usually seen in its own category, “it clearly stays to be seen whether it gets the sort of momentum individuals think it will,” said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

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

Now an expert, he states UK firms need to approach the market thoroughly, picking partners with care and avoiding errors that could result in regulator reaction.

“This is an opportunity for the American sports betting gambler … I’m not exactly sure whether it is an opportunity for company,” he states. “It really depends on the result of [state] legislation and how business operators pursue the opportunity.”

‘It will be partnerships’

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a portion of profits as an “integrity charge”.

International companies deal with the included obstacle of an effective existing video gaming market, with casino operators, state-run lottery games and Native American people that are seeking to defend their turf.

Analysts state UK companies will require to strike partnerships, using their know-how and innovation in order to make inroads.

They indicate SBTech’s current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.

“It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation,” Mr Hawkley stated.

‘It will just depend’

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

The business has actually been purchasing the US market since 2011, when it purchased 3 US firms to develop a presence in Nevada.

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

It works as risk 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 family name in Nevada but that’s not necessarily the goal everywhere.

“We definitely plan to have a very significant brand name existence in New Jersey,” he stated. “In other states, it will simply depend on policy and possibly who our regional partner is.”

“The US is going to be the greatest sports betting wagering market in the world,” he added. “Obviously that’s not going to take place on day one.”

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