UK wagering 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 firms as sports betting starts to spread out in America.
From Tuesday, new guidelines on sports betting came into effect 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 first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.
The market sees a "once in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the market states counting on the US stays a dangerous bet, as UK business deal with complicated state-by-state regulation and competition from established regional interests.
"It's something that we're truly focusing on, but similarly we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, according to a report by Technavio, external released in January.
Firms are wishing to use more of that activity after last month's decision, which struck down a 1992 federal law that disallowed 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 really legalise sports betting wagering, leaving that concern to local lawmakers.
That is expected to result in considerable variation in how companies get accredited, where sports betting wagering can take place, and which events are open to speculation - with big implications for the size of the marketplace.
Potential income varieties from $4.2 bn to nearly $20bn yearly depending on elements like how numerous 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 big'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I think many people ... are looking 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, predicts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in annual income.
But bookies face 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 largely to Native American lands and Nevada's Las Vegas strip till fairly 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 slow to legalise lots of types of online gaming, in spite of a 2011 Justice Department opinion that appeared to get rid of obstacles.
While sports betting wagering is generally viewed in its own classification, "it clearly stays to be seen whether it gets the type of momentum individuals think it will," stated 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 jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a consultant, he says UK companies need to approach the market thoroughly, picking partners with caution and avoiding errors that could cause regulator backlash.
"This is a chance for the American sports betting wagerer ... I'm not sure whether it is a chance for service," he states. "It really is dependent on the result of [state] legislation and how business operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to collect a portion of earnings as an "stability cost".
International companies deal with the included challenge of an effective existing gaming industry, with casino operators, state-run lotteries and Native American tribes that are seeking to defend their grass.
Analysts say UK firms will require to strike partnerships, offering their expertise and technology in order to make inroads.
They indicate SBTech's current announcement 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, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has been buying the US market considering that 2011, when it acquired 3 US firms to develop a presence in Nevada.
William Hill now uses about 450 people in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
It works as danger supervisor 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 actually ended up being a household name in Nevada but that's not always the objective all over.
"We definitely intend to have a very significant brand existence in New Jersey," he said. "In other states, it will simply depend on regulation and possibly who our regional partner is."
"The US is going to be the greatest sports betting wagering market in the world," he included. "Obviously that's not going to take place on day one."
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