UK wagering firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread in America.
From Tuesday, brand-new guidelines on wagering entered into result in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.
The market sees a "when in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are coming to grips with debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly suitable.
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But the industry states counting on the US remains a dangerous bet, as UK companies deal with complex state-by-state regulation and competitors from established local interests.
"It's something that we're truly concentrating on, however similarly we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income last year, according to a report by Technavio, external published in January.
Firms are wanting 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 few others from authorising sports betting wagering.
The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that question to local lawmakers.
That is anticipated to result in significant variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with big ramifications for the size of the market.
Potential revenue ranges from $4.2 bn to practically $20bn annually depending on elements like how many states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be substantial'", 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 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in yearly revenue.
But bookies deal with a far various landscape in America than they carry out in the UK, where sports betting shops are a regular sight.
US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip till fairly just recently.
In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise lots of kinds of online sports betting, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting wagering is generally viewed 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 professor at Drake University and co-author of a book about sports betting policy.
David Carruthers is the former primary executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a consultant, he states UK companies must approach the marketplace thoroughly, selecting partners with care and avoiding missteps that could cause regulator backlash.
"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is a chance for company," he says. "It actually is dependent on the result of [state] legislation and how the company operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to collect a portion of earnings as an "stability fee".
International business deal with the added obstacle of a powerful existing gaming market, with gambling establishment operators, state-run lottery games and Native American people that are seeking to protect their grass.
Analysts say UK firms will require to strike partnerships, offering their competence and technology 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 kind 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 innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has actually been purchasing the US market considering that 2011, when it acquired 3 US companies to establish an existence 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 threat supervisor for the Delaware Lottery and has invested millions alongside a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a family name in Nevada but that's not always the goal everywhere.
"We definitely mean to have an extremely considerable brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and possibly who our local partner is."
"The US is going to be the biggest sports betting wagering market on the planet," he added. "Obviously that's not going to take place on the first day."
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