UK sports betting companies bet 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 out in America.
From Tuesday, brand-new guidelines on wagering entered into impact in Delaware, a small east coast state about two 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 method for states to permit sports betting wagering.
The market sees a "when in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are facing debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly suitable.
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But the market says relying on the US stays a dangerous bet, as UK companies face complex state-by-state policy and competition from established regional interests.
"It's something that we're really focusing on, but similarly we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue last year, according to a report by Technavio, external published in January.
Firms are intending 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 few others from authorising sports betting wagering.
The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that concern to local legislators.
That is anticipated to result in significant variation in how companies get certified, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the market.
Potential revenue ranges from $4.2 bn to almost $20bn every year depending upon elements like the number of states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I believe the majority of 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 require time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in yearly income.
But bookmakers deal with a far different landscape in America than they do in the UK, where wagering shops are a frequent sight.
US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise numerous types of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting is normally 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 wagering regulation.
David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he states UK companies must approach the market thoroughly, selecting partners with care and avoiding bad moves that might result in regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm not sure whether it is a chance for business," he says. "It truly depends on the result of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity fee".
International business deal with the added challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to safeguard their turf.
Analysts say UK firms will need to strike collaborations, providing their competence and innovation in order to make inroads.
They point to SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.
"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The company has actually been buying the US market since 2011, when it acquired three US companies to develop an existence in Nevada.
William Hill now employs about 450 individuals in the US and has announced collaborations with casinos in Iowa and New Jersey.
It works as threat supervisor for the Delaware Lottery and has invested millions together with a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a household name in Nevada but that's not necessarily the objective all over.
"We definitely mean to have a very substantial brand existence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our regional partner is."
"The US is going to be the most significant sports betting wagering market worldwide," he added. "Obviously that's not going to take place on the first day."
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