UK wagering firms gamble 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, new guidelines on sports betting entered into impact in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
The industry sees a "once in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK firms, which are facing combination, increased online competition and tougher rules from UK regulators, the timing is particularly appropriate.
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But the industry says relying on the US remains a risky bet, as UK business deal with complex state-by-state guideline and competitors from entrenched regional interests.
"It's something that we're actually focusing on, but equally we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income in 2015, according to a report by Technavio, external released in January.
Firms are intending to tap into more of that activity after last month's decision, which overruled 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 really legalise sports betting, leaving that question to regional lawmakers.
That is expected to cause considerable variation in how firms get certified, where sports betting can happen, and which events are open to speculation - with huge implications for the size of the market.
Potential profits varieties from $4.2 bn to nearly $20bn annually depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I think the majority of people ... are looking 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 in some type by 2023, developing a market with about $6bn in annual income.
But bookies deal with a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.
US laws restricted sports betting mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular imagination, sports betting wagering has 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 sports betting, in spite of a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting is usually seen in its own category, "it clearly remains to be seen whether it gets the sort of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a consultant, he states UK companies must approach the marketplace carefully, choosing partners with care and avoiding missteps that could lead to regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is an opportunity for business," he states. "It actually is reliant on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to collect a percentage of income as an "stability charge".
International business face the included difficulty of an effective existing gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to protect their grass.
Analysts say UK firms will require to strike partnerships, providing their proficiency and technology in order to make inroads.
They indicate SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.
"It will be a win-win for everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has been investing in the US market considering that 2011, when it acquired 3 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 threat manager for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a household name in Nevada but that's not necessarily the goal all over.
"We certainly intend to have a very substantial brand name presence in New Jersey," he stated. "In other states, it will simply depend upon guideline and potentially who our local partner is."
"The US is going to be the most significant sports betting wagering market on the planet," he included. "Obviously that's not going to take place on the first day."
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