UK wagering firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, new rules on sports betting entered impact in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The changes are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.
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 analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with combination, increased online competition and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the industry states counting on the US remains a risky bet, as UK companies deal with complicated state-by-state regulation and competition from established regional interests.
"It's something that we're actually concentrating on, however similarly we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US dream sports betting site FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming profits in 2015, according to a report by Technavio, external published in January.
Firms are hoping to use more of that activity after last month's decision, which struck down 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, leaving that question to local legislators.
That is anticipated to cause substantial variation in how companies get accredited, where sports betting can take place, and which events are open to speculation - with huge ramifications for the size of the market.
Potential profits ranges from $4.2 bn to almost $20bn each year depending on aspects like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I think the majority of people ... are taking a look 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 some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual revenue.
But bookies deal with a far different landscape in America than they perform in the UK, where betting shops are a regular sight.
US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip up until relatively recently.
In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually likewise been slow to legalise lots of forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.
While sports betting is generally seen in its own classification, "it clearly stays to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former primary executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he states UK firms need to approach the marketplace carefully, selecting partners with care and preventing missteps that could result in regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for business," he states. "It really depends on the outcome of [state] legislation and how the organization operators pursue the opportunity."
'It will be collaborations'
As legalisation begins, sports betting firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to collect a percentage of revenue as an "stability charge".
International business deal with the added obstacle of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to protect their turf.
Analysts say UK companies will need to strike collaborations, offering their expertise and technology in order to make inroads.
They point to SBTech's recent statement that it is offering 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, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the realities.
The company has been purchasing the US market since 2011, when it bought 3 US firms to develop a presence in Nevada.
William Hill now uses about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has invested millions together with a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has become a home name in Nevada but that's not always the objective everywhere.
"We definitely intend to have a very considerable brand name 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 most significant sports betting market on the planet," he added. "Obviously that's not going to take place on the first day."
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