UK wagering companies gamble 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 wagering starts to spread out in America.
From Tuesday, brand-new rules on sports betting entered into impact 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 changes are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.
The industry sees a "once in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK companies, which are grappling with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially opportune.
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But the industry states depending on the US stays a dangerous bet, as UK companies deal with complicated state-by-state policy and competition from entrenched regional interests.
"It's something that we're really concentrating on, however equally we do not want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue 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 choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting betting.
The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local legislators.
That is anticipated to cause substantial variation in how companies get licensed, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the marketplace.
Potential earnings ranges from $4.2 bn to almost $20bn yearly depending upon 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 huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he stated: "I believe 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 require 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, producing a market with about $6bn in annual income.
But bookmakers face a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.
US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise many types of online sports betting, despite a 2011 Justice Department viewpoint that appeared to remove obstacles.
While sports betting wagering is normally viewed in its own category, "it plainly remains to be seen whether it gets the type of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the former chief executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he states UK firms must approach the market carefully, picking partners with caution and preventing mistakes that could cause regulator reaction.
"This is a chance for the American sports betting bettor ... I'm not sure whether it is a chance for service," he states. "It actually depends on the outcome of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of profits as an "integrity cost".
International companies face the included challenge of an effective existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to defend their grass.
Analysts say UK companies will need to strike collaborations, using their expertise and innovation in order to make inroads.
They point to SBTech's current announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.
"It will be a win-win for everybody, however 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 buying the US market because 2011, when it purchased three US companies to establish a presence in Nevada.
William Hill now employs about 450 individuals in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has invested millions along with a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not necessarily the goal everywhere.
"We certainly mean to have a really substantial brand name presence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our local partner is."
"The US is going to be the greatest sports betting wagering market worldwide," he added. "Obviously that's not going to take place on day one."
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