UK sports betting firms bet 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 wagering entered into effect 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 enable sports betting wagering.
The market sees a "as soon as in a generation" opportunity to establish 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 harder rules from UK regulators, the timing is particularly suitable.
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But the industry says counting on the US stays a dangerous bet, as UK business deal with complex state-by-state policy and competitors from entrenched regional interests.
"It's something that we're actually concentrating on, however equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming income in 2015, according to a report by Technavio, external published in January.
Firms are wishing to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.
The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to regional legislators.
That is expected to lead to substantial variation in how firms get certified, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the marketplace.
Potential revenue varieties from $4.2 bn to almost $20bn annually depending upon aspects like how many states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I think many people ... are looking 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 some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in yearly earnings.
But bookies deal with a far various landscape in America than they carry out in the UK, where wagering stores are a regular sight.
US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip until reasonably recently.
In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise numerous kinds of online gaming, despite a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting is generally viewed in its own classification, "it clearly stays to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting 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 an expert, he states 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 gambler ... I'm unsure whether it is an opportunity for organization," he says. "It actually is dependent on the result of [state] legislation and how the organization operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to collect a percentage of revenue as an "stability charge".
International companies deal with the included difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to protect their grass.
Analysts state UK companies will need to strike collaborations, providing their knowledge and innovation in order to make inroads.
They point to SBTech's recent announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.
"It will be a win-win for everyone, but it will be collaborations and it will be driven by innovation," Mr Hawkley said.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The business has been purchasing the US market given that 2011, when it purchased three US firms to develop an existence in Nevada.
William Hill now uses about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a family name in Nevada however that's not necessarily the objective all over.
"We certainly plan to have a very substantial brand existence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our local partner is."
"The US is going to be the most significant sports betting market worldwide," he added. "Obviously that's not going to take place on the first day."
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