UK sports betting companies gamble 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 wagering starts to spread in America.
From Tuesday, new guidelines on wagering came into effect in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
The market sees a "once in a generation" opportunity to develop a brand-new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the industry says relying on the US stays a dangerous bet, as UK business deal with complicated state-by-state policy and competition from entrenched regional interests.
"It's something that we're actually concentrating on, but equally we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, according to a report by Technavio, external published in January.
Firms are hoping to use 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 wagering.
The ruling discovered 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 local legislators.
That is anticipated to lead to substantial variation in how firms get licensed, where sports betting wagering can take place, and which occasions are open to speculation - with big ramifications for the size of the market.
Potential earnings varieties from $4.2 bn to practically $20bn each year depending upon factors like how lots of states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "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 time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in yearly revenue.
But bookmakers face a far different landscape in America than they do in the UK, where betting stores are a frequent sight.
US laws restricted sports betting mainly to Native American lands and Nevada's Las Vegas strip till fairly recently.
In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise numerous forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting is typically viewed in its own category, "it plainly stays to be seen whether it gets the kind 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 former president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a specialist, he says UK companies ought to approach the marketplace carefully, selecting partners with care and preventing missteps that could result in regulator reaction.
"This is a chance for the American sports betting gambler ... I'm not sure whether it is a chance for company," he states. "It actually depends on the outcome of [state] legislation and how the company operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which desire to gather a portion of revenue as an "integrity cost".
International business deal with the added obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to protect their grass.
Analysts state UK firms will require to strike partnerships, offering their knowledge and technology 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 sort 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 simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The business has actually been investing in the US market since 2011, when it acquired three US companies to develop a presence 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 threat supervisor for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually ended up being a home name in Nevada however that's not always the objective all over.
"We certainly plan to have a very considerable brand name presence in New Jersey," he stated. "In other states, it will just depend on regulation and possibly who our regional partner is."
"The US is going to be the greatest sports betting market on the planet," he added. "Obviously that's not going to occur on the first day."
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