UK wagering companies gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, brand-new guidelines on sports betting 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 first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.
The industry sees a "once in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are coming to grips with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially opportune.
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But the industry states counting on the US stays a dangerous bet, as UK business face complicated state-by-state regulation and competition from entrenched local interests.
"It's something that we're really concentrating on, however similarly we do not desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting site 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 hoping to take advantage of more of that activity after last month's choice, 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 really legalise sports betting, leaving that concern to local lawmakers.
That is expected to lead to significant variation in how companies get licensed, where sports betting can take place, and which events are open to speculation - with huge ramifications for the size of the marketplace.
Potential profits varieties from $4.2 bn to nearly $20bn annually depending upon elements like how many states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I think the majority of individuals ... 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, developing a market with about $6bn in annual profits.
But bookies face a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.
US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise lots of forms of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to remove obstacles.
While sports betting is typically seen in its own classification, "it plainly stays to be seen whether it gets the kind of momentum individuals think it will," said 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 detained in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he states UK companies must approach the market thoroughly, choosing partners with care and preventing missteps that could result in regulator reaction.
"This is a chance for the American sports betting bettor ... I'm not exactly sure whether it is an opportunity for service," he says. "It really depends on the outcome 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 demands by US sports betting leagues, which wish to gather a percentage of profits as an "stability charge".
International companies face the included challenge of a powerful existing gaming market, with casino operators, state-run lottery games and Native American people that are seeking to protect their turf.
Analysts state UK firms will require to strike collaborations, using their knowledge and innovation in order to make inroads.
They point to SBTech's recent statement 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 everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has actually been buying the US market because 2011, when it acquired three US companies to establish a presence in Nevada.
William Hill now utilizes about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has invested millions together with a local developer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually become a household name in Nevada but that's not necessarily the objective everywhere.
"We definitely mean to have a really significant brand existence in New Jersey," he stated. "In other states, it will simply depend on guideline and potentially who our local partner is."
"The US is going to be the biggest sports betting market on the planet," he included. "Obviously that's not going to occur on the first day."
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