UK wagering companies bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK companies as sports betting wagering starts to spread in America.
From Tuesday, new rules on wagering entered impact in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.
The industry sees a "as soon as in a generation" chance to develop 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 firms, which are grappling with consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly appropriate.
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But the industry states counting on the US remains a risky bet, as UK companies face complicated state-by-state regulation and competition from entrenched local interests.
"It's something that we're actually focusing on, but equally we do not wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external released in January.
Firms are wishing 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 judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that question to local 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 big implications for the size of the marketplace.
Potential earnings ranges from $4.2 bn to almost $20bn each year depending on aspects like how many states relocate 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 experts KPMG.
Now, he said: "I think many people ... are taking a look 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 take some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly revenue.
But bookmakers face a far different landscape in America than they do in the UK, where sports betting stores are a frequent sight.
US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip till reasonably recently.
In the popular creativity, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise lots of kinds of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to get rid of challenges.
While sports betting wagering is usually viewed in its own classification, "it plainly stays to be seen whether it gets the kind of momentum individuals think it will," said 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 jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he states UK firms should approach the marketplace carefully, choosing partners with care and avoiding mistakes that could cause regulator backlash.
"This is an opportunity for the American sports betting wagerer ... I'm not sure whether it is an opportunity for business," he says. "It really depends on the result of [state] legislation and how the organization operators pursue the opportunity."
'It will be collaborations'
As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to gather a percentage of income as an "integrity fee".
International companies deal with the added difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to protect their grass.
Analysts say UK firms will require to strike partnerships, using their know-how and innovation in order to make inroads.
They point to SBTech's current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers 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, primary executive at William Hill US, is clear-eyed about the truths.
The business has actually been buying the US market considering that 2011, when it purchased three US firms to establish a presence in Nevada.
William Hill now utilizes about 450 individuals in the US and has announced partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has invested millions together with a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually become a family name in Nevada however that's not always the goal everywhere.
"We certainly plan to have a really considerable brand existence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our regional partner is."
"The US is going to be the most significant sports betting wagering market on the planet," he added. "Obviously that's not going to happen on day one."
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