UK sports betting 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 firms as sports betting wagering starts to spread in America.
From Tuesday, brand-new rules on wagering entered result in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The changes 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 permit sports betting wagering.
The market sees a "once in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with combination, increased online competition and tougher guidelines from UK regulators, the timing is especially suitable.
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But the market says depending on the US remains a dangerous bet, as UK business face complicated state-by-state policy and competitors from established local interests.
"It's something that we're really focusing on, but equally we do not desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming profits in 2015, according to a report by Technavio, external released in January.
Firms are hoping to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of 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 legislators.
That is anticipated to result in significant variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the market.
Potential revenue varieties from $4.2 bn to almost $20bn annually depending upon factors like how lots of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in yearly income.
But bookies deal with a far different landscape in America than they carry out in the UK, where wagering stores are a regular sight.
US laws limited gambling mostly to Native American lands and Nevada's Las Vegas strip till reasonably just recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise lots of types of online gambling, despite a 2011 Justice Department viewpoint that appeared to remove barriers.
While sports betting is normally seen in its own category, "it clearly stays to be seen whether it gets the type of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the former primary executive of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.
Now an expert, he says UK companies should approach the market carefully, choosing partners with caution and avoiding missteps that might lead to regulator reaction.
"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for company," he states. "It truly depends on the outcome of [state] legislation and how business operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to gather a percentage of revenue as an "stability cost".
International companies face the added difficulty of a powerful existing gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to protect their grass.
Analysts say UK firms will require to strike collaborations, using their know-how and technology in order to make inroads.
They indicate SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type 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 said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has actually been investing in the US market since 2011, when it acquired three US firms to develop a presence in Nevada.
William Hill now utilizes about 450 individuals in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
It works as threat supervisor 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 become a household name in Nevada however that's not necessarily the goal everywhere.
"We certainly plan to have an extremely significant brand existence in New Jersey," he said. "In other states, it will just depend on regulation and possibly who our regional partner is."
"The US is going to be the biggest sports betting wagering market worldwide," he added. "Obviously that's not going to take place on the first day."
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