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 firms as sports betting starts to spread in America.
From Tuesday, new guidelines on wagering entered into impact in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey might start 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.
The industry sees a "once in a generation" chance to establish 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 combination, increased online competitors and tougher 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 companies deal with complicated state-by-state regulation and competition from established regional interests.
"It's something that we're actually concentrating on, however similarly we do not want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue last year, according to a report by Technavio, external released in January.
Firms are hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting wagering.
The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to local legislators.
That is anticipated to cause substantial variation in how companies get certified, where sports betting can take place, and which events are open to speculation - with huge ramifications for the size of the marketplace.
Potential earnings ranges from $4.2 bn to almost $20bn each year depending on aspects like the number of states move 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 big'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I believe a lot of people ... are taking a look 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 require time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in yearly earnings.
But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a regular sight.
US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise many forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove barriers.
While sports betting wagering is normally viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.
Now an expert, he says UK firms must approach the marketplace carefully, choosing partners with caution and preventing missteps that could result in regulator reaction.
"This is an opportunity for the American sports betting wagerer ... I'm not sure whether it is a chance for business," he says. "It really depends on the result of [state] legislation and how business operators pursue the opportunity."
'It will be partnerships'
As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to collect a portion of income as an "integrity cost".
International business deal with the included obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to safeguard their turf.
Analysts state UK companies will need to strike collaborations, offering their competence and innovation in order to make inroads.
They point to SBTech's current statement 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, however 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 truths.
The business has been investing in the US market because 2011, when it bought 3 US firms to develop an existence in Nevada.
William Hill now utilizes about 450 people in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has actually invested millions alongside a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has become a home name in Nevada but that's not always the goal everywhere.
"We certainly mean to have a very substantial brand name existence in New Jersey," he said. "In other states, it will simply depend upon regulation and possibly who our local partner is."
"The US is going to be the greatest sports betting market in the world," he added. "Obviously that's not going to occur on day one."
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