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 companies as sports betting starts to spread in America.
From Tuesday, brand-new rules on wagering entered into 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 modifications are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.
The industry sees a "when 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 at Davy.
For UK companies, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly suitable.
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But the market says depending on the US stays a risky bet, as UK business face complicated state-by-state policy and competitors from established local interests.
"It's something that we're really concentrating on, but similarly we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits in 2015, according to a report by Technavio, external released in January.
Firms are wishing to tap into more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.
The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional lawmakers.
That is expected to cause considerable variation in how firms get accredited, where sports betting can take place, and which events are open to speculation - with big implications for the size of the marketplace.
Potential income ranges from $4.2 bn to practically $20bn yearly depending on factors like how numerous 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 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 require 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, developing a market with about $6bn in yearly revenue.
But bookies deal with a far different landscape in America than they carry out in the UK, where wagering stores are a regular sight.
US laws restricted gambling mostly to Native American lands and Nevada's Las Vegas strip up until 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 numerous kinds of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.
While sports betting wagering is typically seen in its own classification, "it plainly remains to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former chief executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a consultant, he says UK firms ought to approach the marketplace thoroughly, picking partners with caution and preventing bad moves that could lead to regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for organization," he states. "It actually is reliant on the outcome of [state] legislation and how the organization operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to gather a portion of revenue as an "stability charge".
International companies face the included difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to safeguard their turf.
Analysts state UK firms will need to strike collaborations, using their knowledge and innovation in order to make inroads.
They indicate SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.
"It will be a win-win for everybody, however it will be collaborations and it will be driven by technology," Mr Hawkley stated.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The company has been purchasing the US market because 2011, when it acquired 3 US firms to establish an existence in Nevada.
William Hill now uses about 450 individuals in the US and has actually announced partnerships with casinos in Iowa and New Jersey.
It works as risk manager 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 actually become a household name in Nevada however that's not necessarily the objective everywhere.
"We definitely plan to have a very substantial brand name presence in New Jersey," he said. "In other states, it will simply depend on policy and potentially who our local partner is."
"The US is going to be the biggest sports betting market worldwide," he added. "Obviously that's not going to occur on the first day."
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