UK sports betting firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK companies as sports betting wagering starts to spread out in America.
From Tuesday, brand-new rules on wagering entered effect in Delaware, a small 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 end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
The market sees a "as soon as in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are coming to grips with consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly appropriate.
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But the industry says counting on the US stays a risky bet, as UK companies face complex state-by-state policy and competitors from established regional interests.
"It's something that we're truly concentrating on, however similarly we do not wish to overhype it," said James Midmer, spokesman 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 earnings 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 overruled a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.
The judgment discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to regional lawmakers.
That is anticipated to result in substantial variation in how firms get licensed, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.
Potential profits varieties from $4.2 bn to nearly $20bn every year depending upon aspects like the number of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be big'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "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 some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in yearly revenue.
But bookmakers face a far different landscape in America than they do in the UK, where wagering stores are a regular sight.
US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise numerous forms of online sports betting, regardless of a 2011 Justice Department opinion that appeared to eliminate obstacles.
While sports betting wagering is typically viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting 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 prison time.
Now an expert, he says UK companies should approach the marketplace thoroughly, selecting partners with care and avoiding bad moves that could result in regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is a chance for organization," he states. "It actually depends on the outcome of [state] legislation and how the company operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting firms are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of revenue as an "stability charge".
International companies deal with the added obstacle of a powerful existing video gaming market, with gambling establishment operators, state-run lotteries and Native American people that are seeking to defend their turf.
Analysts state UK firms will require to strike partnerships, offering their proficiency and technology in order to make inroads.
They indicate SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
"It will be a win-win for everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has been purchasing the US market given that 2011, when it acquired three US firms to develop an existence in Nevada.
William Hill now uses about 450 people in the US and has revealed collaborations with gambling establishments in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has invested millions together with a regional designer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a household name in Nevada however that's not necessarily the objective all over.
"We certainly intend to have an extremely substantial brand name presence in New Jersey," he stated. "In other states, it will just depend on regulation and possibly who our regional partner is."
"The US is going to be the most significant sports betting market on the planet," he added. "Obviously that's not going to happen on the first day."
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