UK wagering companies gamble 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 wagering starts to spread out in America.
From Tuesday, new guidelines on sports betting entered into result in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
The market sees a "once in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are facing combination, increased online competition and tougher rules from UK regulators, the timing is especially opportune.
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But the market says depending on the US remains a dangerous bet, as UK business deal with complex state-by-state regulation and competitors from entrenched local interests.
"It's something that we're actually focusing on, but similarly we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming profits last year, according to a report by Technavio, external published in January.
Firms are hoping to tap into more of that activity after last month's decision, which struck down 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 anticipated to cause considerable variation in how companies get certified, where sports betting wagering can happen, and which events are open to speculation - with big implications for the size of the market.
Potential revenue varieties from $4.2 bn to nearly $20bn annually depending on aspects like the number of states transfer to legalise, Oxford Economics estimated in a 2017 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 consultants KPMG.
Now, he stated: "I think the majority of 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 take time'."
'Remains to be seen"
Chris Grove, handling 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 revenue.
But bookmakers deal with a far different landscape in America than they do in the UK, where wagering shops are a regular sight.
US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually likewise been slow to legalise many kinds of online gambling, in spite of a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting wagering is normally viewed in its own classification, "it clearly stays to be seen whether it gets the type of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a specialist, he says UK companies ought to approach the market thoroughly, choosing partners with caution and avoiding errors that could lead to regulator reaction.
"This is a chance for the American sports betting bettor ... I'm not exactly sure whether it is a chance for business," he says. "It truly is reliant on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to collect a percentage of income as an "integrity cost".
International business deal with the included challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are seeking to defend their grass.
Analysts say UK companies will need to strike collaborations, using their competence and technology in order to make inroads.
They indicate SBTech's recent statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals 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 simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the realities.
The business has been investing in the US market because 2011, when it acquired three US companies to develop a presence in Nevada.
William Hill now utilizes about 450 individuals in the US and has revealed partnerships 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 designer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually become a household name in Nevada but that's not necessarily the objective all over.
"We certainly mean to have an extremely significant brand name presence in New Jersey," he stated. "In other states, it will simply depend on policy 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 the first day."
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