UK sports betting companies gamble 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 companies as sports betting starts to spread in America.
From Tuesday, new rules on sports betting entered into result in Delaware, a tiny 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 become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.
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But the industry says relying on the US stays a dangerous bet, as UK business deal with complex state-by-state regulation and competitors from entrenched local interests.
"It's something that we're actually concentrating on, however equally we don't desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external published in January.
Firms are intending to tap into more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting wagering.
The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional legislators.
That is anticipated to cause significant variation in how firms get certified, where sports betting can occur, and which occasions are open to speculation - with huge implications for the size of the market.
Potential earnings ranges from $4.2 bn to practically $20bn each year depending on aspects like the number of 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 big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe many people ... are taking a look 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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in annual revenue.
But bookies face a far different landscape in America than they do in the UK, where betting shops are a frequent sight.
US laws limited betting largely to Native American lands and Nevada's Las Vegas strip till fairly just recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise many kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to remove obstacles.
While sports betting wagering is typically viewed in its own classification, "it clearly stays to be seen whether it gets the type of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the previous chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
Now an expert, he states UK companies need to approach the marketplace carefully, picking partners with care and avoiding bad moves that could cause regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm unsure whether it is an opportunity for company," he states. "It actually is reliant on the outcome of [state] legislation and how the company operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a portion of earnings as an "integrity fee".
International companies deal with the included challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their grass.
Analysts state UK firms will require to strike partnerships, using their competence and technology in order to make inroads.
They point to SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.
"It will be a win-win for everybody, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has actually been investing in the US market since 2011, when it acquired three US companies to establish an existence in Nevada.
William Hill now uses about 450 individuals in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as danger 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 ended up being a family name in Nevada however that's not necessarily the goal everywhere.
"We definitely plan to have a really considerable brand name existence in New Jersey," he stated. "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 market on the planet," he added. "Obviously that's not going to happen on the first day."
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