UK sports betting firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK companies as sports betting starts to spread out in America.
From Tuesday, new guidelines on wagering entered into effect in Delaware, a tiny 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 first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
The industry sees a "once in a generation" opportunity to establish a brand-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 competition and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the market states counting on the US stays a dangerous bet, as UK companies deal with complicated state-by-state policy and competition from established regional interests.
"It's something that we're really concentrating on, but similarly we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings 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 struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.
The judgment 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 local legislators.
That is anticipated to cause substantial variation in how firms get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with big ramifications for the size of the marketplace.
Potential revenue ranges from $4.2 bn to practically $20bn every year depending upon elements like the number of states move to legalise, Oxford Economics estimated in a 2017 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 specialists KPMG.
Now, he stated: "I think the majority of individuals ... are looking 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 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, producing a market with about $6bn in annual profits.
But bookies face a far different landscape in America than they carry out in the UK, where wagering shops are a regular sight.
US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip till reasonably just recently.
In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise lots of types of online gambling, despite a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting wagering is generally viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.
David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he states UK firms must approach the market thoroughly, choosing partners with caution and preventing mistakes that might lead to regulator reaction.
"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is a chance for organization," he says. "It really is reliant on the outcome of [state] legislation and how the business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to collect a percentage of revenue as an "stability charge".
International business deal with the included obstacle of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American people that are looking for to protect their grass.
Analysts state UK firms will require to strike collaborations, providing their competence and technology in order to make inroads.
They indicate SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.
"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The company has actually been purchasing the US market because 2011, when it acquired three US firms to develop an existence in Nevada.
William Hill now uses about 450 individuals in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has actually invested millions along with a regional designer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a home name in Nevada however that's not necessarily the objective all over.
"We certainly mean to have a very considerable brand presence in New Jersey," he stated. "In other states, it will simply depend upon regulation and possibly who our regional partner is."
"The US is going to be the biggest sports betting market on the planet," he added. "Obviously that's not going to take place on the first day."
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