UK betting firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, new guidelines on betting came into impact 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 modifications are the very 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 "once in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.
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But the industry states relying on the US remains a risky bet, as UK business face complicated state-by-state guideline and competition from entrenched regional interests.
"It's something that we're really concentrating on, but similarly we don't desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external released in January.
Firms are intending to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.
The judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that question to regional lawmakers.
That is expected to cause considerable variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the market.
Potential income ranges from $4.2 bn to practically $20bn annually depending on factors like the number of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he stated: "I believe many 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, handling 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 yearly revenue.
But bookies deal with a far various landscape in America than they carry out in the UK, where sports betting shops are a regular sight.
US laws minimal sports betting mainly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.
In the popular creativity, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise numerous forms of online gambling, despite a 2011 Justice Department viewpoint 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 kind of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he states UK companies need to approach the market carefully, picking partners with care and preventing bad moves that could result in regulator backlash.
"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for business," he states. "It actually is dependent on the result of [state] legislation and how the company operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which desire to collect a percentage of earnings as an "integrity charge".
International companies face the included challenge of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their grass.
Analysts say UK companies will require to strike partnerships, using their competence and innovation in order to make inroads.
They point to SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.
"It will be a win-win for everybody, but it will be partnerships 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 been buying the US market since 2011, when it purchased three US firms to develop a presence in Nevada.
William Hill now utilizes about 450 people in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a household name in Nevada but that's not necessarily the goal everywhere.
"We definitely plan to have a very substantial brand name presence in New Jersey," he said. "In other states, it will just depend upon regulation and potentially who our local partner is."
"The US is going to be the most significant sports betting wagering market in the world," he included. "Obviously that's not going to happen on the first day."
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