UK wagering firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK companies as sports betting wagering starts to spread out in America.
From Tuesday, brand-new rules on sports betting entered into result in Delaware, a tiny 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 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 market sees a "once in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with consolidation, increased online competition and harder rules from UK regulators, the timing is particularly opportune.
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But the market says counting on the US stays a dangerous bet, as UK companies deal with complex state-by-state guideline and competitors from entrenched regional interests.
"It's something that we're actually concentrating on, but equally we don't desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Require 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 hoping 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 wagering.
The judgment discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that question to local lawmakers.
That is expected to result in substantial variation in how firms get licensed, where sports betting can happen, and which occasions are open to speculation - with huge implications for the size of the market.
Potential revenue varieties from $4.2 bn to nearly $20bn yearly depending upon aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be big'", 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 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, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly profits.
But bookmakers deal with a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.
US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.
In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise many forms of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting wagering is normally seen in its own category, "it clearly stays to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.
David Carruthers is the previous chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he states UK firms need to approach the market carefully, choosing partners with care and avoiding mistakes that might cause regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm unsure whether it is a chance for service," he says. "It actually is dependent on the outcome of [state] legislation and how the company operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering firms 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 added challenge of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to safeguard their grass.
Analysts say UK firms will require to strike collaborations, offering their knowledge and innovation in order to make inroads.
They point to SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.
"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The company has been purchasing the US market given that 2011, when it bought 3 US firms to establish an existence in Nevada.
William Hill now uses 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 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 certainly mean to have a really considerable brand name existence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our local partner is."
"The US is going to be the most significant sports betting wagering market on the planet," he added. "Obviously that's not going to occur on day one."
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