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 wagering came into effect in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The changes are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.
The industry sees a "once 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 at Davy.
For UK companies, which are coming to grips with combination, increased online competitors and tougher rules from UK regulators, the timing is particularly suitable.
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But the market states depending on the US stays a risky bet, as UK business face complex state-by-state guideline and competition from established local interests.
"It's something that we're really concentrating on, however equally we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits in 2015, according to a report by Technavio, external released in January.
Firms are wanting 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 found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional lawmakers.
That is expected to lead to considerable variation in how companies get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the marketplace.
Potential earnings ranges from $4.2 bn to almost $20bn yearly depending on aspects like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he stated: "I believe 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 take time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly profits.
But bookmakers deal with a far various landscape in America than they do in the UK, where sports betting stores are a regular sight.
US laws restricted gambling mostly to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise numerous forms of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove challenges.
While sports betting wagering is generally seen in its own classification, "it plainly stays to be seen whether it gets the type of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the previous chief executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a consultant, he states UK firms should approach the market thoroughly, selecting partners with care and avoiding mistakes that might result in regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is an opportunity for company," he states. "It truly depends on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to collect a portion of income as an "stability cost".
International business face the added obstacle of a powerful existing video gaming market, with casino operators, state-run lottos and Native American tribes that are looking for to defend their grass.
Analysts state UK companies will require to strike partnerships, offering their proficiency and innovation in order to make inroads.
They point to SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.
"It will be a win-win for everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The business has actually been investing in the US market because 2011, when it purchased three US companies to establish a presence in Nevada.
William Hill now uses about 450 individuals in the US and has revealed partnerships with casinos in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has actually invested millions together with a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has become a family name in Nevada but that's not always the objective everywhere.
"We certainly mean to have a really substantial brand presence in New Jersey," he said. "In other states, it will just depend on regulation and potentially who our local 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 day one."
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