UK wagering companies gamble on US after sports betting wager judgment
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 sports betting entered into effect in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The changes 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 wagering.
The industry sees a "as soon as in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly appropriate.
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But the market says counting on the US stays a risky bet, as UK companies deal with complex state-by-state guideline and competitors from entrenched regional interests.
"It's something that we're really concentrating on, however similarly we do not want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external published in January.
Firms are hoping 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 judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional lawmakers.
That is anticipated to lead to substantial variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.
Potential income ranges from $4.2 bn to almost $20bn yearly depending upon factors 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 consultants KPMG.
Now, he stated: "I think the majority of people ... are looking at this as, 'it's a chance but 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly earnings.
But bookies face a far different landscape in America than they carry out in the UK, where sports betting shops are a frequent sight.
US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip up until fairly recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise many types of online gaming, regardless of a 2011 Justice Department opinion that appeared to get rid of challenges.
While sports betting is typically viewed in its own category, "it clearly remains to be seen whether it gets the sort 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 previous chief executive of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a consultant, he says UK companies need to approach the market thoroughly, selecting partners with care and avoiding mistakes that might cause regulator reaction.
"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for organization," he says. "It really is reliant on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which want to collect a portion of profits as an "integrity fee".
International companies deal with the added difficulty of an effective existing gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their grass.
Analysts state UK firms will require to strike collaborations, using their know-how and innovation in order to make inroads.
They point to SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.
"It will be a win-win for everyone, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has been investing in the US market since 2011, when it purchased three US firms to develop an existence in Nevada.
William Hill now utilizes about 450 individuals in the US and has actually announced partnerships with casinos in Iowa and New Jersey.
It works as danger manager 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 become a home name in Nevada however that's not always the goal all over.
"We definitely intend to have an extremely significant brand name existence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our regional partner is."
"The US is going to be the most significant sports betting market in the world," he added. "Obviously that's not going to occur on day one."
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