UK wagering companies bet on US after sports betting wager judgment
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 guidelines on wagering entered into effect in Delaware, a small 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 enable sports betting.
The market sees a "when in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with combination, increased online competitors and tougher rules from UK regulators, the timing is especially appropriate.
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But the market says relying on the US stays a dangerous bet, as UK companies face complex state-by-state policy and competitors from entrenched regional interests.
"It's something that we're truly focusing on, however similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming profits in 2015, according to a report by Technavio, external released in January.
Firms are hoping to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond 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 really legalise sports betting, leaving that question to regional legislators.
That is expected to lead to substantial variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with huge implications for the size of the marketplace.
Potential profits ranges from $4.2 bn to practically $20bn annually depending on elements like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research 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 specialists KPMG.
Now, he said: "I believe the majority of people ... are looking 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 take time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in annual earnings.
But bookies 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 largely to Native American lands and Nevada's Las Vegas strip up 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 likewise been sluggish to legalise lots of forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to remove challenges.
While sports betting wagering is normally seen in its own classification, "it plainly stays to be seen whether it gets the kind of momentum people think 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 primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served jail time.
Now an expert, he states UK firms ought to approach the marketplace thoroughly, selecting partners with caution and avoiding errors that might cause regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for company," he says. "It actually is reliant on the result of [state] legislation and how business operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to gather a percentage of earnings as an "stability fee".
International companies face the included obstacle of an effective existing video gaming market, with casino operators, state-run lottos and Native American tribes that are looking for to defend their turf.
Analysts say UK companies will require to strike collaborations, using their competence and technology in order to make inroads.
They point to SBTech's current statement that it is supplying 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 everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The company has actually been purchasing the US market because 2011, when it purchased 3 US companies to establish an existence in Nevada.
William Hill now utilizes about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as threat supervisor for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a family name in Nevada but that's not always the goal everywhere.
"We definitely plan to have a really considerable brand existence in New Jersey," he stated. "In other states, it will just depend on policy and possibly 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 happen on the first day."
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