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

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

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

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

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

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

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

Why the sports betting market faces an uncertain future

How does illegal sports betting wagering work and what are the worries?

But the industry states relying on the US stays a risky bet, as UK companies deal with complex state-by-state guideline and competition from established local interests.

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

'Take some time'

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

Firms are hoping to use more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.

The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to local legislators.

That is anticipated to cause considerable variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the market.

Register at Bet9ja using the promotion code YOHAIG for a N100,000 welcome bonus

Potential profits varieties from $4.2 bn to almost $20bn annually depending upon elements like how numerous 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'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

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

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering stores are a frequent sight.

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

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

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

While sports betting wagering is normally seen in its own category, "it clearly stays to be seen whether it gets the type of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting 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 prison time.

Now an expert, he states UK firms ought to approach the marketplace thoroughly, picking partners with caution and avoiding errors that could cause regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is a chance for organization," he says. "It really depends on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which want to gather a portion of income as an "integrity charge".

International companies deal with the added difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are seeking to protect their turf.

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

They point to SBTech's current 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 everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The business has actually been purchasing the US market because 2011, when it acquired three US companies to establish an existence in Nevada.

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

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

Mr Asher said William Hill has actually become a family name in Nevada but that's not always the goal all over.

"We certainly plan to have an extremely considerable brand name existence in New Jersey," he stated. "In other states, it will simply depend upon guideline and potentially who our local partner is."

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