UK sports betting companies gamble on US after sports betting wager ruling

5 June 2018

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

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

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

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

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

For UK firms, which are grappling with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly opportune.
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But the industry states depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competition from entrenched regional interests.
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"It's something that we're really concentrating on, but similarly we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external published in January.

Firms are intending to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond 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 actually legalise sports betting wagering, leaving that concern to local lawmakers.
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That is expected to lead to considerable variation in how firms get certified, where sports betting can take place, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to practically $20bn every year depending on factors like how lots of states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I believe many people ... are looking at this as, 'it's a chance however 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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual earnings.

But bookmakers deal with a far different landscape in America than they carry out in the UK, where wagering shops are a regular sight.

US laws limited gambling mainly to Native American lands and Nevada's Las Vegas strip till fairly recently.

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

States have likewise been slow to legalise many types of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.

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

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

Now a consultant, he says UK companies should approach the marketplace carefully, choosing partners with caution and preventing mistakes that could lead to regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm uncertain whether it is an opportunity for company," he states. "It truly depends on the result of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of profits as an "integrity fee".

International business face the added difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to safeguard their turf.

Analysts state UK firms will require to strike collaborations, using their expertise and technology 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 likely to materialise.

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

'It will simply depend'

Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
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The company has been investing in the US market because 2011, when it purchased three US companies to establish a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
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Mr Asher said William Hill has actually become a home name in Nevada however that's not necessarily the goal all over.

"We certainly plan to have a very considerable brand name existence in New Jersey," he stated. "In other states, it will just depend on 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 in the world," he included. "Obviously that's not going to take place on the first day."

US ruling opens method for sports betting
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