UK sports betting 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 firms as sports betting starts to spread out in America.
From Tuesday, new rules on wagering came into 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 end up being 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 brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are facing consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially appropriate.
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But the market says counting on the US stays a risky bet, as UK business face complex state-by-state policy and competition from established local interests.
"It's something that we're actually focusing on, but similarly we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, according to a report by Technavio, external published in January.
Firms are wanting 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 few others from authorising sports betting.
The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to local legislators.
That is anticipated to lead to 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 marketplace.
Potential earnings ranges from $4.2 bn to almost $20bn annually depending upon aspects like how lots of states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be big'", said 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 an opportunity but it's not going to be $20bn and it's going to be state by state and it's going to require time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in annual profits.
But bookies deal with a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.
US laws limited gambling mainly to Native American lands and Nevada's Las Vegas strip up until relatively recently.
In the popular imagination, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise lots of forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate obstacles.
While sports betting is typically seen in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law teacher 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 consultant, he states UK companies ought to approach the marketplace carefully, choosing partners with care and preventing errors that could result in regulator reaction.
"This is a chance for the American sports betting bettor ... I'm not sure whether it is a chance for organization," he states. "It really is reliant on the outcome of [state] legislation and how the organization operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a percentage of earnings as an "stability charge".
International business deal with the added challenge of an effective existing gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to safeguard their turf.
Analysts say UK companies will need to strike partnerships, providing their competence and innovation in order to make inroads.
They point to SBTech's recent statement 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 innovation," Mr Hawkley said.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has been purchasing the US market since 2011, when it acquired three US firms to establish an existence in Nevada.
William Hill now employs about 450 individuals in the US and has revealed collaborations with casinos in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has actually invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually become a home name in Nevada but that's not always the objective everywhere.
"We definitely plan to have a very considerable brand presence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our regional partner is."
"The US is going to be the greatest sports betting market worldwide," he added. "Obviously that's not going to occur on day one."
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