UK wagering firms gamble 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 betting starts to spread in America.
From Tuesday, new rules on wagering entered into impact in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might begin 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 way for states to permit sports betting wagering.
The industry sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are facing combination, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.
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But the industry states depending on the US remains a risky bet, as UK companies face complicated state-by-state guideline and competitors from established regional interests.
"It's something that we're actually focusing on, but similarly we do not want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in 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 overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
The judgment discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local legislators.
That is expected to lead to substantial variation in how firms get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with huge ramifications for the size of the market.
Potential earnings varieties from $4.2 bn to almost $20bn annually depending upon aspects like how many states relocate 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 huge'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "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 require time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in yearly profits.
But bookmakers deal with a far various landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.
US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip until relatively just recently.
In the popular imagination, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise lots of types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting is usually viewed in its own category, "it clearly stays to be seen whether it gets the kind 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 former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he says UK firms need to approach the marketplace carefully, selecting partners with caution and avoiding bad moves that might result in regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is a chance for business," he states. "It actually is dependent on the result of [state] legislation and how the service operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which want to collect a portion of earnings as an "integrity cost".
International companies deal with the included difficulty of an effective existing gaming market, with gambling establishment operators, state-run lottos and Native American people that are looking for to defend their grass.
Analysts say UK firms will require to strike collaborations, providing their expertise and innovation in order to make inroads.
They point to SBTech's recent statement that it is offering innovation 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 partnerships and it will be driven by technology," Mr Hawkley stated.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The business has actually been buying the US market because 2011, when it bought 3 US firms to develop a presence in Nevada.
William Hill now employs about 450 individuals in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a home name in Nevada however that's not always the objective all over.
"We definitely intend to have an extremely significant brand existence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our regional partner is."
"The US is going to be the greatest sports betting wagering market worldwide," he included. "Obviously that's not going to happen on the first day."
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