UK sports betting firms gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting starts to spread in America.
From Tuesday, brand-new rules on wagering entered result in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey might begin accepting sports bets as early as Friday.
The changes are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.
The industry sees a "once in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are facing consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the market says counting on the US remains a dangerous bet, as UK companies deal with complex state-by-state policy and competitors from entrenched local interests.
"It's something that we're actually concentrating on, however similarly we don't desire to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, 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 choice, which overruled a 1992 federal law that barred states outside of 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 concern to regional legislators.
That is anticipated to cause significant variation in how firms get certified, where sports betting wagering can take place, and which events are open to speculation - with huge implications for the size of the market.
Potential earnings varieties from $4.2 bn to practically $20bn every year depending on factors like the number of 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 huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I think many 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 time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual revenue.
But bookmakers 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 gambling mainly to Native American lands and Nevada's Las Vegas strip up until fairly recently.
In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise numerous forms of online gaming, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.
While sports betting is typically seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the previous president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a specialist, he states UK firms need to approach the market thoroughly, selecting partners with care and preventing missteps that might result in regulator reaction.
"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for organization," he says. "It actually is dependent on the outcome of [state] legislation and how the company operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a portion of profits as an "stability fee".
International business deal with the added challenge of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to defend their grass.
Analysts state UK companies will need to strike partnerships, using their proficiency and innovation in order to make inroads.
They point to SBTech's recent 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 innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has been investing in the US market considering that 2011, when it bought 3 US companies to establish 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 risk supervisor for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a household name in Nevada but that's not always the objective all over.
"We definitely mean to have a really considerable brand presence in New Jersey," he said. "In other states, it will simply depend upon guideline and possibly who our local partner is."
"The US is going to be the most significant sports betting wagering market worldwide," he included. "Obviously that's not going to occur on day one."
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