UK wagering 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 in America.
From Tuesday, new guidelines on sports betting entered impact in Delaware, a tiny 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 very first in what might 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" chance to develop a brand-new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.
For UK companies, which are facing consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly suitable.
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But the industry states counting on the US remains a risky bet, as UK companies deal with complicated state-by-state regulation and competitors from established local interests.
"It's something that we're really focusing on, but equally we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, 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 overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.
The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to regional lawmakers.
That is expected to cause 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 ranges from $4.2 bn to practically $20bn every year depending on factors like the number of states transfer 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 huge'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I think the majority of individuals ... 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 in some form by 2023, developing a market with about $6bn in annual revenue.
But bookmakers deal with a far different landscape in America than they do in the UK, where sports betting shops are a frequent sight.
US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip till fairly recently.
In the popular creativity, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise lots of kinds of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting wagering is normally viewed in its own category, "it plainly stays to be seen whether it gets the kind of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.
David Carruthers is the previous primary executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he states UK companies must approach the marketplace thoroughly, choosing partners with caution and avoiding errors that might cause regulator backlash.
"This is a chance for the American sports betting bettor ... I'm not sure whether it is a chance for business," he says. "It actually is dependent on the outcome of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which desire to gather a portion of earnings as an "integrity charge".
International business face the added obstacle of an effective existing gaming market, with casino operators, state-run lottery games and Native American tribes that are seeking to protect their turf.
Analysts state UK companies will need to strike partnerships, offering their competence and innovation in order to make inroads.
They point to SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.
"It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has been purchasing the US market because 2011, when it purchased 3 US firms to establish a presence in Nevada.
William Hill now uses about 450 people in the US and has actually announced partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has actually invested millions along with a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a family name in Nevada but that's not necessarily the goal everywhere.
"We certainly mean to have a very significant brand name presence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."
"The US is going to be the greatest sports betting wagering market worldwide," he added. "Obviously that's not going to happen on the first day."
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