UK wagering firms gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, new guidelines on wagering came into impact 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 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 market sees a "once in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.
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But the industry says depending on the US remains a dangerous bet, as UK companies face complex state-by-state policy and competitors from entrenched local interests.
"It's something that we're actually focusing on, but equally we don't desire to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming income in 2015, according to a report by Technavio, external published in January.
Firms are intending to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
The judgment 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 regional lawmakers.
That is anticipated to result in significant variation in how companies get licensed, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the marketplace.
Potential revenue ranges from $4.2 bn to practically $20bn every year depending on aspects like how lots of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be big'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I think many 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 time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in yearly income.
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 gaming mostly to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many kinds of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of obstacles.
While sports betting is typically viewed in its own category, "it clearly 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 wagering policy.
David Carruthers is the previous primary executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he says UK companies must approach the market thoroughly, picking partners with care and avoiding errors that could result in regulator backlash.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is an opportunity for business," he states. "It really is reliant on the result of [state] legislation and how the business operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which want to gather a portion of revenue as an "integrity charge".
International companies face the added challenge of a powerful existing gaming market, with casino operators, state-run lotteries and Native American people that are looking for to protect their grass.
Analysts say UK firms will require to strike collaborations, using their know-how and technology in order to make inroads.
They point to SBTech's recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.
"It will be a win-win for everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The company has been buying the US market given that 2011, when it bought three US firms to establish an existence in Nevada.
William Hill now uses about 450 individuals in the US and has revealed partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually ended up being a household name in Nevada however that's not necessarily the goal all over.
"We certainly plan to have an extremely substantial brand name presence in New Jersey," he said. "In other states, it will simply depend upon policy and possibly who our local partner is."
"The US is going to be the biggest sports betting market in the world," he included. "Obviously that's not going to happen on the first day."
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