UK wagering firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, new guidelines on sports betting entered into result in Delaware, a tiny east coast state about two 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 method for states to enable sports betting.
The market sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with consolidation, increased online competition and tougher rules from UK regulators, the timing is especially opportune.
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But the industry says depending on the US remains a risky bet, as UK companies face complex state-by-state policy and competition from established regional interests.
"It's something that we're really focusing on, however equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, according to a report by Technavio, external published in January.
Firms are hoping to tap into more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.
The ruling discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local legislators.
That is expected to lead to substantial variation in how companies get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with big ramifications for the size of the market.
Potential revenue varieties from $4.2 bn to nearly $20bn every year depending on elements like the number of 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 big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe the majority of 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, creating a market with about $6bn in annual profits.
But bookmakers face a far various landscape in America than they do in the UK, where sports betting shops are a regular sight.
US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip until reasonably recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many kinds of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.
While sports betting is generally viewed in its own classification, "it clearly stays 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 policy.
David Carruthers is the former chief executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a specialist, he states UK companies need to approach the marketplace carefully, choosing partners with caution and avoiding errors that might result in regulator reaction.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for service," he says. "It really is dependent on the result of [state] legislation and how the company operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to gather a portion of revenue as an "integrity charge".
International business deal with the added challenge of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to defend their grass.
Analysts state UK firms will require to strike collaborations, providing their proficiency and innovation in order to make inroads.
They indicate SBTech's recent statement 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, chief executive at William Hill US, is clear-eyed about the realities.
The business has actually been investing in the US market since 2011, when it bought three US firms to develop a presence in Nevada.
William Hill now uses about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has become a family name in Nevada however that's not always the objective all over.
"We certainly intend to have an extremely substantial brand name existence in New Jersey," he said. "In other states, it will simply depend upon guideline and potentially who our local partner is."
"The US is going to be the biggest sports betting wagering market worldwide," he added. "Obviously that's not going to occur on the first day."
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