UK sports betting firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK companies as sports betting wagering starts to spread in America.
From Tuesday, new rules on wagering entered into effect in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could 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 allow sports betting.
The market sees a "once in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK firms, which are facing combination, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.
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But the market says counting on the US stays a dangerous bet, as UK business deal with complex state-by-state guideline and competition from entrenched regional interests.
"It's something that we're actually concentrating on, however equally we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income 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 decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.
The judgment found 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 result in considerable variation in how companies get certified, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the marketplace.
Potential revenue varieties from $4.2 bn to almost $20bn every year depending on factors 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'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "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 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, developing a market with about $6bn in annual income.
But bookmakers face a far various landscape in America than they perform in the UK, where sports betting stores are a frequent sight.
US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise lots of types of online gaming, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.
While sports betting is usually seen in its own classification, "it plainly remains 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 previous president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he says UK firms need to approach the marketplace carefully, choosing partners with caution and avoiding missteps that might cause regulator backlash.
"This is an opportunity for the American sports betting wagerer ... I'm not exactly sure whether it is an opportunity for service," he states. "It actually is reliant on the outcome of [state] legislation and how business operators pursue the opportunity."
'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 wish to gather a percentage of earnings as an "integrity charge".
International companies face the added challenge of a powerful existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are seeking to defend their grass.
Analysts state UK companies will need to strike collaborations, offering their knowledge and technology in order to make inroads.
They point to SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.
"It will be a win-win for everyone, however 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 truths.
The company has actually been buying the US market given that 2011, when it acquired 3 US firms to establish an existence in Nevada.
William Hill now uses about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has actually invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a home name in Nevada however that's not necessarily the objective all over.
"We definitely intend to have a very substantial brand name presence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our local partner is."
"The US is going to be the greatest sports betting wagering market in the world," he included. "Obviously that's not going to take place on the first day."
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