UK sports betting 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 starts to spread out in America.
From Tuesday, new rules on wagering came into effect 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 modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
The market sees a "once in a generation" chance to develop a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK firms, which are coming to grips with debt consolidation, increased online competition and harder rules from UK regulators, the timing is especially opportune.
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But the industry says counting on the US remains a dangerous bet, as UK business face complex state-by-state guideline and competitors from established local interests.
"It's something that we're really focusing on, however equally we do not want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US dream 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 released in January.
Firms are intending to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting.
The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that concern to regional legislators.
That is expected to lead to considerable variation in how firms get accredited, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the marketplace.
Potential income ranges from $4.2 bn to almost $20bn annually depending on factors like the number of states move 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 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in annual earnings.
But bookies face a far various landscape in America than they perform in the UK, where wagering shops are a frequent sight.
US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip till reasonably recently.
In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise many types of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of barriers.
While sports betting wagering is usually seen in its own classification, "it plainly stays to be seen whether it gets the sort of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.
David Carruthers is the previous president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he says UK companies should approach the marketplace carefully, choosing partners with caution and avoiding bad moves that might cause regulator backlash.
"This is a chance for the American sports betting bettor ... I'm uncertain whether it is an opportunity for organization," he says. "It really depends on the outcome of [state] legislation and how the company operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of revenue as an "integrity cost".
International companies face the added obstacle of an effective existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their turf.
Analysts say UK firms will need to strike collaborations, using their knowledge and technology in order to make inroads.
They indicate SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.
"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The business has actually been purchasing the US market since 2011, when it purchased three US companies to establish an existence in Nevada.
William Hill now employs about 450 people in the US and has revealed collaborations with casinos in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has actually invested millions along with a local developer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually ended up being a household name in Nevada but that's not always the goal all over.
"We certainly intend to have an extremely substantial brand existence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our regional partner is."
"The US is going to be the greatest sports betting wagering market on the planet," he added. "Obviously that's not going to happen on day one."
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