UK sports betting firms gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK companies as sports betting starts to spread in America.
From Tuesday, new rules on sports betting came into result in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The modifications are the very 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 industry sees a "when in a generation" chance to develop a brand-new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.
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But the market says counting on the US remains a dangerous bet, as UK companies deal with complex state-by-state policy and competition from entrenched local interests.
"It's something that we're really focusing on, but similarly we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.
'Require 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 wanting to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.
The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to regional lawmakers.
That is anticipated to lead to considerable variation in how firms get certified, where sports betting wagering can happen, and which events are open to speculation - with big implications for the size of the marketplace.
Potential income ranges from $4.2 bn to nearly $20bn each year depending upon aspects like how lots of states move to legalise, Oxford Economics estimated 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 however 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in annual income.
But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting shops are a frequent sight.
US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise many types of online gaming, despite a 2011 Justice Department opinion that appeared to get rid of challenges.
While sports betting is usually seen 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 teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the previous president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he says UK firms ought to approach the market carefully, selecting partners with care and avoiding missteps that could result in regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for business," he states. "It really depends on the outcome of [state] legislation and how the service operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a percentage of profits as an "stability charge".
International business face the added difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to protect their turf.
Analysts state UK companies will require to strike collaborations, using their knowledge and innovation in order to make inroads.
They point to SBTech's current statement that it is offering 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 everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley stated.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The business has actually been purchasing the US market given that 2011, when it acquired 3 US companies to establish an existence in Nevada.
William Hill now employs about 450 individuals in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a family name in Nevada however that's not always the objective all over.
"We certainly mean to have a really considerable brand name presence in New Jersey," he said. "In other states, it will just depend upon guideline and possibly who our regional partner is."
"The US is going to be the most significant sports betting wagering market worldwide," he included. "Obviously that's not going to happen on day one."
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