UK sports betting companies gamble on US after sports betting wager judgment
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, brand-new guidelines on wagering entered into effect 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 become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
The market sees a "as soon as in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are facing combination, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.
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But the market says depending on the US stays a risky bet, as UK companies face complex state-by-state regulation and competition from established regional interests.
"It's something that we're really concentrating on, however equally we do not want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.
'Require 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 released in January.
Firms are wanting to use more of that activity after last month's decision, 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 really legalise sports betting, leaving that concern to local legislators.
That is expected to cause considerable variation in how firms get accredited, where sports betting wagering can take place, and which events are open to speculation - with huge implications for the size of the market.
Potential profits ranges from $4.2 bn to practically $20bn yearly depending on aspects like how many 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'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I think the majority of people ... are taking a look 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, anticipates that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in annual income.
But bookmakers face a far different landscape in America than they do in the UK, where sports betting shops are a frequent sight.
US laws limited sports betting mostly to Native American lands and Nevada's Las Vegas strip up 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 actually also been slow to legalise many kinds of online sports betting, despite a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting is usually viewed in its own classification, "it plainly stays to be seen whether it gets the sort of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he states UK firms must approach the market carefully, picking partners with caution and preventing bad moves that might cause regulator reaction.
"This is a chance for the American sports betting gambler ... I'm not exactly 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 collaborations'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to collect a percentage of income as an "integrity fee".
International business deal with the included challenge of an effective existing video gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to protect their turf.
Analysts state UK firms will need to strike collaborations, offering their competence and technology in order to make inroads.
They indicate SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The business has actually been investing in the US market given that 2011, when it bought three US companies to establish a presence in Nevada.
William Hill now uses about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has invested millions alongside a regional designer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a home name in Nevada however that's not necessarily the goal all over.
"We certainly plan to have an extremely significant brand name existence in New Jersey," he stated. "In other states, it will simply depend upon guideline and possibly who our local partner is."
"The US is going to be the greatest sports betting market worldwide," he added. "Obviously that's not going to happen on day one."
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