UK sports betting 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 starts to spread out in America.
From Tuesday, new guidelines on sports betting entered into result 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 modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.
The industry sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are facing consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.
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But the market states relying on the US remains a dangerous bet, as UK companies face complicated state-by-state policy and competitors from established regional interests.
"It's something that we're actually concentrating on, however similarly we don't desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which 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 income in 2015, according to a report by Technavio, external published in January.
Firms are hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports sports betting.
The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to local legislators.
That is anticipated to result in considerable variation in how companies get certified, where sports betting wagering can occur, and which events are open to speculation - with big ramifications for the size of the market.
Potential earnings ranges from $4.2 bn to practically $20bn every year depending upon aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I believe the majority of people ... are taking a look at this as, 'it's an opportunity 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, forecasts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in annual profits.
But bookmakers deal with a far different landscape in America than they perform in the UK, where sports betting stores are a frequent sight.
US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip until reasonably just recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise many types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove obstacles.
While sports betting wagering is normally seen in its own classification, "it plainly stays to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he states UK firms ought to approach the market carefully, choosing partners with care and avoiding missteps that might cause regulator backlash.
"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for company," he states. "It really is reliant on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to gather a percentage of income as an "integrity cost".
International companies face the added difficulty of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to safeguard their grass.
Analysts state UK companies will require to strike partnerships, using their proficiency and technology in order to make inroads.
They indicate SBTech's current statement that it is offering technology 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, but it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has actually been purchasing the US market since 2011, when it purchased 3 US firms to establish a presence in Nevada.
William Hill now uses about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has invested millions together with a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a household name in Nevada however that's not always the goal everywhere.
"We definitely intend to have an extremely significant brand name existence in New Jersey," he said. "In other states, it will simply depend on policy and possibly who our regional partner is."
"The US is going to be the most significant sports betting market worldwide," he added. "Obviously that's not going to occur on the first day."
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