UK sports betting companies gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread in America.
From Tuesday, new rules on wagering entered effect in Delaware, a small 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 very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.
The market 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 grappling with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.
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But the market states depending on the US stays a risky bet, as UK business deal with complicated state-by-state guideline and competition from entrenched local interests.
"It's something that we're really concentrating on, however similarly we do not wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external published 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 outside of Nevada and a couple of others from authorising sports betting.
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 local lawmakers.
That is anticipated to cause significant variation in how firms get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.
Potential earnings ranges from $4.2 bn to nearly $20bn each year depending upon factors like how many states move 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 huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I think 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, predicts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in yearly income.
But bookmakers deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.
US laws limited gambling mostly to Native American lands and Nevada's Las Vegas strip until relatively just recently.
In the popular creativity, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually likewise been slow to legalise lots of forms of online gambling, in spite of a 2011 Justice Department opinion that appeared to get rid of obstacles.
While sports betting wagering is usually viewed in its own category, "it plainly stays to be seen whether it gets the type of momentum individuals think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a consultant, he says UK companies ought to approach the market thoroughly, picking partners with care and avoiding bad moves that might result in regulator reaction.
"This is an opportunity for the American sports betting gambler ... I'm uncertain whether it is an opportunity for organization," he states. "It actually depends on the result of [state] legislation and how the organization operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to collect a portion of income as an "integrity fee".
International companies deal with the included obstacle of a powerful existing gaming market, with casino operators, state-run lottery games and Native American tribes that are seeking to protect their grass.
Analysts say UK firms will need to strike partnerships, using their competence 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 type of deals likely to materialise.
"It will be a win-win for everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'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 three US companies to develop an existence in Nevada.
William Hill now employs about 450 individuals in the US and has announced collaborations with casinos in Iowa and New Jersey.
It works as threat supervisor for the Delaware Lottery and has actually invested millions along with a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a household name in Nevada however that's not necessarily the goal everywhere.
"We definitely plan to have a really significant brand existence in New Jersey," he said. "In other states, it will simply depend upon policy and potentially who our local partner is."
"The US is going to be the biggest sports betting market worldwide," he added. "Obviously that's not going to happen on the first day."
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