UK betting companies bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, brand-new guidelines on sports betting came into effect in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might 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 wagering.
The market sees a "once in a generation" opportunity to establish a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK companies, which are grappling with consolidation, increased online competition and harder rules from UK regulators, the timing is particularly opportune.
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But the market states 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 really concentrating on, however similarly we do not wish to overhype it," stated James Midmer, spokesperson 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 published in January.
Firms are wishing to use more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of 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 in fact legalise sports betting, leaving that concern to regional legislators.
That is anticipated to result in significant variation in how companies get licensed, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.
Potential income varieties from $4.2 bn to practically $20bn each year depending on elements like the number of 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'", stated Will Hawkley, London-based head of leisure for consultants 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, predicts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in yearly revenue.
But bookies face a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.
US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip until fairly just recently.
In the popular imagination, sports betting wagering 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 betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.
While sports betting wagering is typically viewed in its own classification, "it clearly remains to be seen whether it gets the sort of momentum individuals 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 president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a specialist, he says UK firms should approach the marketplace thoroughly, picking partners with caution and preventing bad moves that could result in regulator backlash.
"This is a chance for the American sports betting wagerer ... I'm not sure whether it is an opportunity for company," he states. "It really depends on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to collect a portion of profits as an "integrity cost".
International companies deal with the added difficulty of a powerful existing gaming industry, with gambling establishment operators, state-run lottos and Native American people that are seeking to safeguard their grass.
Analysts state UK companies will need to strike partnerships, offering their competence and technology in order to make inroads.
They indicate SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
"It will be a win-win for everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The business has been buying the US market considering that 2011, when it purchased three US companies to establish an existence in Nevada.
William Hill now uses about 450 people in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has invested millions together with a local 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 necessarily the objective everywhere.
"We definitely intend to have an extremely substantial brand name existence in New Jersey," he said. "In other states, it will just depend on policy and potentially who our local partner is."
"The US is going to be the greatest sports betting wagering market in the world," he included. "Obviously that's not going to take place on day one."
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