UK wagering companies 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 companies as sports betting wagering starts to spread out in America.
From Tuesday, new guidelines on wagering came into effect in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.
The industry sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with consolidation, increased online competition and harder rules from UK regulators, the timing is particularly appropriate.
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But the industry states relying on the US remains a risky bet, as UK companies deal with complex state-by-state regulation and competition from established regional interests.
"It's something that we're truly concentrating on, but equally 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 time'
The US represented 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 hoping to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of 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 regional legislators.
That is anticipated to cause substantial variation in how companies get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with huge implications for the size of the marketplace.
Potential income varieties from $4.2 bn to nearly $20bn yearly depending on aspects like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I believe the majority of people ... are looking at this as, 'it's a chance 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in annual income.
But bookies face a far different landscape in America than they carry out in the UK, where sports betting shops are a regular sight.
US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip up until fairly just recently.
In the popular creativity, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise many types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove barriers.
While sports betting is generally seen in its own category, "it plainly stays 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 guideline.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he says UK firms must approach the market carefully, choosing partners with care and avoiding mistakes that might lead to regulator backlash.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for business," he states. "It really depends on the outcome of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to collect a portion of profits as an "integrity cost".
International companies deal with the added difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their grass.
Analysts say UK companies will require to strike partnerships, using their knowledge and technology in order to make inroads.
They point to SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers most 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 simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has actually been buying the US market considering that 2011, when it acquired three US firms to develop a presence in Nevada.
William Hill now utilizes about 450 individuals in the US and has revealed collaborations with casinos in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has actually invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a home name in Nevada but that's not necessarily the goal everywhere.
"We definitely plan to have a very significant brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our regional partner is."
"The US is going to be the greatest sports betting wagering market in the world," he added. "Obviously that's not going to take place on the first day."
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