UK wagering companies gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread in America.
From Tuesday, brand-new rules on sports betting entered effect in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
The industry sees a "when in a generation" opportunity to establish a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with debt consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly suitable.
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But the industry says depending on the US stays a dangerous bet, as UK business face complicated state-by-state guideline and competition from established regional interests.
"It's something that we're really concentrating on, however equally we do not desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.
'Take 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 published in January.
Firms are wishing 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 few others from authorising sports betting wagering.
The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to local legislators.
That is expected to cause significant variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the marketplace.
Potential profits ranges from $4.2 bn to almost $20bn each year depending on aspects like the number of 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 consultants KPMG.
Now, he said: "I believe the majority of people ... are looking 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, forecasts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in annual revenue.
But bookies deal with a far different landscape in America than they do in the UK, where wagering stores are a frequent sight.
US laws minimal gambling largely to Native American lands and Nevada's Las Vegas strip till 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 gaming, in spite of a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting is generally viewed in its own category, "it plainly remains to be seen whether it gets the type of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he states UK firms ought to approach the marketplace carefully, selecting partners with care and avoiding bad moves that could result in regulator reaction.
"This is a chance for the American sports betting bettor ... I'm not exactly sure whether it is an opportunity for organization," he says. "It really is dependent on the result of [state] legislation and how the business operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to collect a portion of profits as an "integrity charge".
International business deal with the included obstacle of an effective existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to protect their grass.
Analysts say UK companies will require to strike partnerships, providing their know-how and innovation 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 likely to materialise.
"It will be a win-win for everybody, however it will be collaborations 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 realities.
The company has actually been investing in the US market considering that 2011, when it bought three US companies to develop an existence in Nevada.
William Hill now utilizes about 450 people in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as danger supervisor 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 become a home name in Nevada but that's not necessarily the goal all over.
"We certainly plan to have a very substantial brand name existence in New Jersey," he said. "In other states, it will just depend upon guideline and possibly who our regional partner is."
"The US is going to be the biggest sports betting market on the planet," he added. "Obviously that's not going to occur on day one."
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