UK sports betting firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, new rules on sports betting entered into result in Delaware, a tiny 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 end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.
The market sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with combination, increased online competitors and tougher rules from UK regulators, the timing is especially appropriate.
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But the industry states relying on the US remains a risky bet, as UK business face complicated state-by-state policy and competition from entrenched local interests.
"It's something that we're really concentrating on, however similarly we do not want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming income 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 choice, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.
The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to local lawmakers.
That is expected to cause considerable variation in how firms get accredited, where sports betting wagering can occur, and which events are open to speculation - with big implications for the size of the marketplace.
Potential revenue ranges from $4.2 bn to practically $20bn annually depending on aspects like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I believe many 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in annual profits.
But bookmakers deal with a far different landscape in America than they do in the UK, where sports betting stores are a frequent sight.
US laws restricted sports betting mainly to Native American lands and Nevada's Las Vegas strip till reasonably recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise many types of online gaming, despite a 2011 Justice Department viewpoint that appeared to remove challenges.
While sports betting is typically seen in its own classification, "it clearly remains 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 wagering policy.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he says UK firms need to approach the marketplace carefully, choosing partners with care and preventing errors that might lead to regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for company," he states. "It truly depends on the result of [state] legislation and how business operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to gather a portion of income as an "integrity charge".
International business deal with the added challenge of an effective existing gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to protect their turf.
Analysts state UK companies will need to strike partnerships, using their expertise and technology in order to make inroads.
They indicate SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type 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 technology," Mr Hawkley said.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The company has actually been buying the US market considering that 2011, when it bought three US companies to develop a presence in Nevada.
William Hill now employs about 450 individuals in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has actually invested millions together with a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a home name in Nevada however that's not necessarily the goal everywhere.
"We definitely plan to have a really considerable brand name presence in New Jersey," he said. "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 occur on the first day."
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