UK sports betting companies 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 firms as sports betting wagering starts to spread out in America.
From Tuesday, new rules on wagering entered 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 first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.
The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly appropriate.
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But the industry states depending on the US stays a dangerous bet, as UK companies face complex state-by-state policy and competition from entrenched local interests.
"It's something that we're actually concentrating on, however similarly we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Take 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 wanting to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting.
The ruling 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 local legislators.
That is anticipated to result in significant variation in how companies get licensed, where sports betting can take place, and which events are open to speculation - with big implications for the size of the market.
Potential profits ranges from $4.2 bn to practically $20bn yearly depending upon factors like how lots of 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 substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I believe many people ... are looking 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 time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in yearly earnings.
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 restricted gambling mostly to Native American lands and Nevada's Las Vegas strip till fairly recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise lots of kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to eliminate obstacles.
While sports betting wagering is typically seen in its own classification, "it clearly remains to be seen whether it gets the sort of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.
David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a specialist, he states UK companies should approach the market thoroughly, selecting partners with care and preventing missteps that might cause regulator reaction.
"This is a chance for the American sports betting bettor ... I'm unsure whether it is an opportunity for service," he states. "It actually depends on the outcome of [state] legislation and how the business operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to gather a percentage of income as an "integrity cost".
International business face the included challenge of a powerful existing gaming market, with gambling establishment operators, state-run lotteries and Native American people that are looking for to protect their turf.
Analysts say UK companies will require to strike collaborations, offering their competence and technology in order to make inroads.
They point to SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind 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 stated.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has been buying the US market since 2011, when it purchased 3 US companies to develop an existence in Nevada.
William Hill now employs about 450 individuals in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.
It works as threat supervisor for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a household name in Nevada but that's not necessarily the goal all over.
"We definitely intend to have a really considerable brand presence in New Jersey," he stated. "In other states, it will just depend upon policy and potentially who our regional partner is."
"The US is going to be the biggest sports betting market in the world," he included. "Obviously that's not going to occur on the first day."
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