UK wagering companies gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread in America.
From Tuesday, new guidelines on wagering entered effect 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 might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
The industry sees a "when 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 study at Davy.
For UK companies, which are facing combination, increased online competition and tougher rules from UK regulators, the timing is particularly opportune.
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But the industry says depending on the US stays a risky bet, as UK companies deal with complicated state-by-state policy and competition from established regional interests.
"It's something that we're actually focusing on, but equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external published in January.
Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting.
The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to regional legislators.
That is anticipated to lead to significant variation in how companies get certified, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the market.
Potential revenue varieties from $4.2 bn to almost $20bn yearly depending upon factors like the number of states transfer to legalise, Oxford Economics approximated in a 2017 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 said: "I think many people ... are taking a look 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual profits.
But bookies deal with a far various landscape in America than they perform in the UK, where sports betting stores are a frequent sight.
US laws minimal sports betting mostly to Native American lands and Nevada's Las Vegas strip till reasonably just recently.
In the popular imagination, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise many forms of online sports betting, regardless of a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting wagering is usually viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
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 specialist, he says UK firms should approach the marketplace thoroughly, choosing partners with caution and avoiding bad moves that might result in regulator reaction.
"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for business," he says. "It actually is reliant on the result of [state] legislation and how the company operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting firms are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which want to collect a portion of revenue as an "integrity fee".
International companies deal with the added difficulty of a powerful existing video gaming industry, with casino operators, state-run lottos and Native American people that are seeking to defend their grass.
Analysts state UK companies will require to strike collaborations, offering their expertise and innovation in order to make inroads.
They point to SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.
"It will be a win-win for everyone, but it will be partnerships 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.
The business has been investing in the US market considering that 2011, when it purchased three US companies to develop an existence in Nevada.
William Hill now employs about 450 individuals in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has actually invested millions along with a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a home name in Nevada however that's not necessarily the goal everywhere.
"We certainly mean to have a really significant brand name presence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our regional partner is."
"The US is going to be the most significant sports betting market worldwide," he included. "Obviously that's not going to happen on day one."
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