UK wagering firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, brand-new rules on wagering came into impact 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 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 industry sees a "when in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.
For UK firms, which are coming to grips with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially appropriate.
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But the industry says depending on the US remains a risky bet, as UK business deal with complicated state-by-state policy and competition from entrenched local interests.
"It's something that we're actually concentrating on, however equally we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
'Take 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 hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.
The ruling 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 regional lawmakers.
That is expected to lead to considerable variation in how companies get certified, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.
Potential income ranges from $4.2 bn to nearly $20bn yearly depending on elements like how numerous states move to legalise, Oxford Economics estimated in a 2017 research 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 consultants KPMG.
Now, he stated: "I think the majority of people ... are looking at this as, 'it's an opportunity however 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, managing 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 bookmakers deal with a far various landscape in America than they perform in the UK, where sports betting shops are a frequent sight.
US laws minimal sports betting mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise many kinds of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove barriers.
While sports betting is typically viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a consultant, he states UK firms must approach the market carefully, selecting partners with caution and avoiding mistakes that might lead to regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for company," he states. "It truly depends on the result of [state] legislation and how the business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to gather a portion of income as an "integrity fee".
International companies deal with the added difficulty of a powerful existing video gaming market, with casino operators, state-run lotteries and Native American people that are looking for to defend their grass.
Analysts state UK companies will need to strike partnerships, using their competence and innovation in order to make inroads.
They point to SBTech's recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.
"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The company has been investing in the US market given that 2011, when it acquired three US companies to establish a presence in Nevada.
William Hill now employs about 450 individuals in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as threat supervisor 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 but that's not always the goal everywhere.
"We definitely mean to have a very substantial brand name existence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly 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 occur on day one."
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