UK sports betting companies bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread in America.
From Tuesday, new guidelines on sports betting entered result in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.
The market sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK companies, which are coming to grips with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.
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But the market states depending on the US remains a dangerous bet, as UK companies face complicated state-by-state regulation and competitors from established regional interests.
"It's something that we're really focusing on, however equally we don't 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 gaming earnings in 2015, according to a report by Technavio, external released in January.
Firms are wishing 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 ruling found 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 lawmakers.
That is anticipated to result in substantial variation in how firms get accredited, where sports betting can take place, and which events are open to speculation - with big implications for the size of the market.
Potential profits ranges from $4.2 bn to almost $20bn annually depending on factors like how many states relocate 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 huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I believe a lot of people ... are looking at this as, 'it's an opportunity but 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, forecasts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in annual earnings.
But bookmakers deal with a far different landscape in America than they carry out in the UK, where wagering shops are a regular sight.
US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip till relatively just recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise many kinds of online gambling, in spite of a 2011 Justice Department opinion that appeared to remove barriers.
While sports betting is generally viewed in its own classification, "it clearly remains to be seen whether it gets the type 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 primary executive of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a specialist, he states UK firms need to approach the marketplace thoroughly, choosing partners with caution and avoiding bad moves that might lead to regulator reaction.
"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is an opportunity for service," he states. "It actually depends on the result of [state] legislation and how the service operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which desire to collect a percentage of revenue as an "integrity fee".
International companies deal with the added obstacle of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to safeguard their grass.
Analysts state UK firms will need to strike partnerships, offering their expertise and innovation in order to make inroads.
They indicate SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.
"It will be a win-win for everybody, however it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has actually been investing in the US market given that 2011, when it bought three US firms to establish an existence in Nevada.
William Hill now uses about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a home name in Nevada however that's not always the goal everywhere.
"We certainly plan to have a really substantial brand presence in New Jersey," he stated. "In other states, it will simply depend upon policy and possibly who our regional 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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