UK wagering 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 starts to spread out in America.
From Tuesday, new guidelines on wagering entered into effect in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey could begin 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 way for states to enable sports betting.
The market sees a "as soon as in a generation" opportunity to establish 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 competition and harder rules from UK regulators, the timing is particularly suitable.
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But the industry states depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state guideline and competitors from established local interests.
"It's something that we're really focusing on, however similarly we don't desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.
'Take 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 use 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 wagering.
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 question to local legislators.
That is anticipated to lead to significant variation in how firms get licensed, where sports betting wagering can take place, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.
Potential income varieties from $4.2 bn to practically $20bn every year depending upon factors 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 substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I think the majority of people ... are taking a look at this as, 'it's an opportunity however it's not going to be $20bn and it's going to be state by state and it's going to require 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 income.
But bookies face a far various landscape in America than they perform in the UK, where sports betting shops are a regular sight.
US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.
In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many types of online sports betting, regardless of a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting wagering is generally seen in its own category, "it plainly stays to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.
David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he states UK firms must approach the market thoroughly, selecting partners with care and avoiding mistakes that could result in regulator reaction.
"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is a chance for organization," he says. "It really depends on the outcome of [state] legislation and how the business operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which desire to gather a percentage of profits as an "integrity charge".
International companies deal with the included challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American people that are looking for to protect their grass.
Analysts say UK companies will require to strike collaborations, providing their expertise and technology in order to make inroads.
They point to SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind 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 said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The business has actually been purchasing the US market given that 2011, when it acquired three US firms to develop a presence in Nevada.
William Hill now employs about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.
It works as danger 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 become a family name in Nevada but that's not always the objective all over.
"We definitely plan to have an extremely considerable brand existence in New Jersey," he said. "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 market in the world," he included. "Obviously that's not going to happen on day one."
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