UK sports betting firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK companies as sports betting wagering starts to spread out in America.
From Tuesday, new guidelines on wagering came 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 might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.
The industry sees a "as soon as in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.
For UK companies, which are facing consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.
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But the market says counting on the US stays a risky bet, as UK business face complicated state-by-state guideline and competition from established local interests.
"It's something that we're actually focusing on, however equally we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, according to a report by Technavio, external published in January.
Firms are wanting to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a few 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 wagering, leaving that concern to local lawmakers.
That is expected to lead to substantial variation in how firms get certified, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the market.
Potential income varieties from $4.2 bn to nearly $20bn every year depending on elements like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I believe the majority of people ... are taking a look at this as, 'it's a chance however 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual revenue.
But bookies deal with a far different landscape in America than they do in the UK, where sports betting shops are a frequent sight.
US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip till fairly just recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise lots of types of online sports betting, despite a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting is generally viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the previous president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a consultant, he says UK companies ought to approach the marketplace carefully, picking partners with care and avoiding mistakes that could cause regulator backlash.
"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for company," he says. "It actually depends on the result of [state] legislation and how the company operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which want to collect a portion of revenue as an "integrity fee".
International companies deal with the added challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to defend their grass.
Analysts state UK companies will require to strike partnerships, offering their competence and technology in order to make inroads.
They point to SBTech's current announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.
"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the realities.
The company has actually been investing in the US market because 2011, when it bought three US companies to establish an existence in Nevada.
William Hill now utilizes about 450 people in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a household name in Nevada however that's not always the objective all over.
"We certainly plan to have an extremely considerable brand name presence in New Jersey," he said. "In other states, it will just depend upon regulation and possibly who our local partner is."
"The US is going to be the biggest sports betting wagering market in the world," he added. "Obviously that's not going to take place on the first day."
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