UK sports betting firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK companies as sports betting wagering starts to spread out in America.
From Tuesday, new rules on sports betting entered impact in Delaware, a tiny east coast state about two 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 method for states to allow sports betting wagering.
The industry sees a "as soon as in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are grappling with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially appropriate.
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But the industry says counting on the US stays a dangerous bet, as UK business face complex state-by-state regulation and competitors from established local interests.
"It's something that we're truly focusing on, but equally we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming revenue last year, according to a report by Technavio, external released in January.
Firms are wishing to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.
The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to local legislators.
That is expected to lead to considerable variation in how companies get accredited, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the market.
Potential income ranges from $4.2 bn to practically $20bn each year depending upon factors like the number of states move 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 big'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in yearly income.
But bookies face a far various landscape in America than they carry out in the UK, where sports betting stores are a regular sight.
US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular imagination, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many kinds of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting is normally seen in its own category, "it clearly remains to be seen whether it gets the sort of momentum individuals believe 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 chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a consultant, he states UK firms ought to approach the marketplace thoroughly, choosing partners with care and avoiding errors that could cause regulator reaction.
"This is an opportunity for the American sports betting wagerer ... I'm not exactly sure whether it is an opportunity for business," he says. "It truly depends on the result of [state] legislation and how the business operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to collect a percentage of earnings as an "stability fee".
International companies face the added challenge of a powerful existing gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to safeguard their turf.
Analysts say UK firms will require to strike partnerships, using their know-how and technology 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 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 stated.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has actually been investing in the US market considering that 2011, when it purchased three US firms to develop a presence in Nevada.
William Hill now uses about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has actually invested millions together with a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has become a household name in Nevada however that's not necessarily the objective everywhere.
"We definitely intend to have a really significant brand presence in New Jersey," he said. "In other states, it will just depend upon regulation and possibly who our regional partner is."
"The US is going to be the most significant sports betting wagering market worldwide," he added. "Obviously that's not going to take place on the first day."
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