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 companies as sports betting starts to spread in America.
From Tuesday, new guidelines on sports betting entered into impact in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The changes are the 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 "once in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are coming to grips with combination, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the market says depending on the US stays a dangerous bet, as UK business face complicated state-by-state policy and competition from entrenched regional interests.
"It's something that we're truly concentrating on, however similarly we don't wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue 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 overruled a 1992 federal law that disallowed states outside of 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 local lawmakers.
That is expected to lead to substantial variation in how firms get accredited, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the market.
Potential profits ranges from $4.2 bn to almost $20bn annually depending upon aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for specialists 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 require 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 bookmakers deal with a far various landscape in America than they do in the UK, where sports betting shops are a frequent sight.
US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip up until reasonably recently.
In the popular creativity, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise numerous forms of online sports betting, despite a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting wagering is usually viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum individuals believe it will," said 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 jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he says UK firms should approach the market thoroughly, picking partners with caution and avoiding missteps that might result in regulator reaction.
"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for company," he says. "It actually is reliant on the result of [state] legislation and how business operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to collect a percentage of profits as an "stability fee".
International companies deal with the included difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are seeking to protect their grass.
Analysts state UK companies will need to strike collaborations, providing their know-how and innovation in order to make inroads.
They point to SBTech's recent announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers 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 simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The business has actually been investing in the US market given that 2011, when it acquired three US firms to develop a presence in Nevada.
William Hill now employs about 450 people 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 along with a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has become a family name in Nevada but that's not always the objective everywhere.
"We certainly plan to have a very considerable brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our local partner is."
"The US is going to be the greatest sports betting market in the world," he included. "Obviously that's not going to occur on the first day."
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