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 wagering starts to spread out in America.
From Tuesday, new rules on wagering came into result 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 method for states to permit sports betting.
The industry sees a "when in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are facing debt consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.
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But the industry says counting on the US remains a risky bet, as UK business face complicated state-by-state policy and competition from entrenched regional interests.
"It's something that we're truly focusing on, but similarly we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits in 2015, according to a report by Technavio, external published in January.
Firms are intending to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.
The judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local legislators.
That is anticipated to lead to substantial variation in how firms get licensed, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the market.
Potential income ranges from $4.2 bn to almost $20bn annually depending on aspects like how numerous 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 huge'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I believe 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 require time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual profits.
But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.
US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip till relatively just recently.
In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting wagering is usually viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum individuals think 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 chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he states UK companies should approach the marketplace thoroughly, selecting partners with caution and avoiding mistakes that could result in regulator reaction.
"This is an opportunity for the American sports betting bettor ... I'm not sure whether it is a chance for business," he states. "It really is reliant on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which want to collect a portion of revenue as an "stability cost".
International business face the included difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to safeguard their grass.
Analysts state UK firms will require to strike collaborations, offering their know-how and technology in order to make inroads.
They indicate SBTech's recent announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
"It will be a win-win for everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The business has been buying the US market given that 2011, when it purchased 3 US companies to establish an existence in Nevada.
William Hill now utilizes about 450 people in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.
It works as risk 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 become a home name in Nevada but that's not always the objective all over.
"We definitely plan to have an extremely considerable brand name existence in New Jersey," he stated. "In other states, it will just depend on policy and potentially who our regional partner is."
"The US is going to be the most significant sports betting market in the world," he included. "Obviously that's not going to take place on day one."
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