UK sports betting 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 companies as sports betting starts to spread out in America.
From Tuesday, new guidelines on wagering came into 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 modifications are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.
The market sees a "as soon as in a generation" opportunity to develop a brand-new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are facing combination, increased online competition and tougher guidelines 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 deal with complex state-by-state regulation and competitors from entrenched regional interests.
"It's something that we're actually focusing on, but equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US dream sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits last year, according to a report by Technavio, external published in January.
Firms are wishing to tap into more of that activity after last month's choice, 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 in fact legalise sports betting, leaving that question to local lawmakers.
That is expected to lead to significant variation in how companies get accredited, where sports betting wagering can take place, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.
Potential revenue ranges from $4.2 bn to practically $20bn each year depending upon elements like how numerous states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe the majority of people ... are taking a look at this as, 'it's an opportunity 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 wagering in some form by 2023, producing a market with about $6bn in annual earnings.
But bookmakers deal with a far different landscape in America than they do in the UK, where sports betting stores are a frequent sight.
US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip until fairly 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 slow to legalise lots of forms of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to remove barriers.
While sports betting wagering is normally viewed in its own category, "it clearly remains 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 regulation.
David Carruthers is the previous president 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 thoroughly, selecting partners with caution and preventing missteps that could cause regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for service," he says. "It actually is reliant on the result of [state] legislation and how the company operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a percentage of revenue as an "stability fee".
International companies deal with the included challenge of a powerful existing gaming industry, with casino operators, state-run lottos and Native American people that are looking for to defend their turf.
Analysts say UK firms will need to strike partnerships, using their know-how and innovation in order to make inroads.
They point to SBTech's current statement that it is providing 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 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 purchasing the US market given that 2011, when it bought three US firms to establish an existence in Nevada.
William Hill now employs about 450 individuals in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has actually invested millions along with a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a home name in Nevada but that's not necessarily the goal everywhere.
"We definitely plan to have a really significant brand presence in New Jersey," he stated. "In other states, it will just depend upon guideline and potentially who our regional partner is."
"The US is going to be the biggest sports betting wagering market in the world," he added. "Obviously that's not going to take place on day one."
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