UK wagering firms gamble 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 starts to spread out in America.
From Tuesday, new guidelines on wagering came into result in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The modifications are the very 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 industry sees a "as soon as in a generation" opportunity to establish 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 coming to grips with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly suitable.
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But the market says relying on the US stays a dangerous bet, as UK companies deal with complex state-by-state regulation and competitors from entrenched regional interests.
"It's something that we're actually focusing on, but equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming earnings 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 outside of Nevada and a couple of others from authorising sports betting.
The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.
That is anticipated to lead to considerable variation in how companies get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.
Potential revenue ranges from $4.2 bn to practically $20bn yearly depending on elements like how lots of states transfer 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 substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I think many 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 take time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in annual income.
But bookies face a far different landscape in America than they carry out in the UK, where sports betting shops are a regular sight.
US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.
In the popular imagination, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise numerous kinds of online gambling, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting wagering is generally seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former chief executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he says UK companies must approach the market thoroughly, choosing partners with care and preventing bad moves that might result in regulator reaction.
"This is an opportunity for the American sports betting wagerer ... I'm not exactly sure whether it is an opportunity for organization," he says. "It actually is reliant on the outcome of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to collect a portion of earnings as an "stability cost".
International companies deal with the added challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to safeguard their grass.
Analysts state UK companies will require to strike collaborations, providing their know-how and technology in order to make inroads.
They point to SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind 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 said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The business has been investing in the US market since 2011, when it bought three US companies to develop an existence in Nevada.
William Hill now employs about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has actually ended up being a home name in Nevada but that's not necessarily the objective everywhere.
"We certainly mean to have an extremely significant brand presence in New Jersey," he stated. "In other states, it will simply depend on policy and possibly who our regional partner is."
"The US is going to be the biggest sports betting market on the planet," he included. "Obviously that's not going to take place on day one."
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