UK sports betting companies bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, brand-new guidelines on sports betting 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 might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.
The market sees a "as soon as in a generation" opportunity 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 consolidation, increased online competition and harder rules from UK regulators, the timing is especially appropriate.
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But the market says depending on the US remains a risky bet, as UK companies face complicated state-by-state guideline and competition from established local interests.
"It's something that we're actually focusing on, but similarly we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in 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 decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.
The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional lawmakers.
That is expected to lead to significant variation in how companies get accredited, where sports betting wagering can take place, and which occasions are open to speculation - with huge implications for the size of the market.
Potential revenue ranges from $4.2 bn to nearly $20bn each year depending on elements like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "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, predicts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in yearly earnings.
But bookmakers face a far various landscape in America than they do in the UK, where wagering stores are a frequent sight.
US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise lots of forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.
While sports betting wagering is usually seen in its own classification, "it clearly stays to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.
David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a consultant, he states UK firms should approach the marketplace carefully, picking partners with care and preventing bad moves that might result in regulator backlash.
"This is a chance for the American sports betting bettor ... I'm uncertain whether it is an opportunity for business," he says. "It actually depends on the result of [state] legislation and how the service operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a portion of earnings as an "integrity cost".
International business face the added difficulty of an effective existing gaming market, with casino operators, state-run lotteries and Native American tribes that are looking for to defend their grass.
Analysts say UK companies will need to strike partnerships, providing their know-how and technology in order to make inroads.
They point to SBTech's recent announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
"It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has actually been buying the US market because 2011, when it purchased 3 US companies to develop a presence in Nevada.
William Hill now uses about 450 individuals in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has invested millions along with 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 but that's not always the goal everywhere.
"We definitely intend to have a really substantial brand presence in New Jersey," he said. "In other states, it will just depend on policy and potentially who our regional partner is."
"The US is going to be the greatest sports betting market on the planet," he included. "Obviously that's not going to happen on day one."
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