firms bet on US after sports betting wager judgment

5 June 2018
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It's high stakes for UK firms as sports betting wagering starts to spread out in America.

From Tuesday, new rules on sports betting came into effect in Delaware, a tiny east coast state about two hours from Washington.
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Neighbouring New Jersey might start accepting sports betting bets as early as Friday.

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

The industry sees a "once in a generation" opportunity to establish 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 competition and harder rules from UK regulators, the timing is particularly appropriate.

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But the industry says counting on the US remains a risky bet, as UK companies face complicated state-by-state guideline and competitors from established local interests.

"It's something that we're really concentrating on, but equally we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently bought the US dream sports betting site FanDuel.

'Require time'

The US accounted for 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 take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting wagering.

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

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

Potential income ranges from $4.2 bn to almost $20bn every year depending on elements like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he stated: "I think 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, managing 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 profits.

But bookies deal with a far various landscape in America than they perform in the UK, where wagering stores are a frequent sight.

US laws limited sports betting largely to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have actually also been sluggish to legalise numerous kinds of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of challenges.
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While sports betting is typically seen in its own category, "it clearly remains to be seen whether it gets the type of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

David Carruthers is the previous chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.

Now an expert, he says UK firms need to approach the market thoroughly, choosing partners with caution and avoiding mistakes that might result in regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is an opportunity for organization," he says. "It really is dependent on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to gather a percentage of income as an "integrity fee".

International companies deal with the included obstacle of a powerful existing video gaming industry, with casino operators, state-run lottos and Native American people that are seeking to defend their turf.

Analysts say UK firms will need to strike collaborations, providing their knowledge and technology in order to make inroads.

They point to SBTech's recent announcement that it is offering 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, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

Joe Asher, president at William Hill US, is clear-eyed about the realities.
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The business has been purchasing the US market considering that 2011, when it bought 3 US firms to develop an existence in Nevada.

William Hill now employs about 450 people in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has become a household name in Nevada however that's not necessarily the goal all over.

"We certainly mean to have a very significant brand existence in New Jersey," he said. "In other states, it will just depend upon policy and possibly who our local partner is."
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"The US is going to be the most significant sports betting wagering market in the world," he added. "Obviously that's not going to take place on day one."

US judgment opens method for sports betting
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