UK sports betting firms bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread 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 start accepting sports betting bets as early as Friday.
The modifications 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 permit sports betting.
The market sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are grappling with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially suitable.
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But the industry states depending on the US remains a dangerous bet, as UK companies deal with complex state-by-state guideline and competition from established local interests.
"It's something that we're really concentrating on, but equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external published in January.
Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.
The judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local lawmakers.
That is anticipated to lead to significant variation in how firms get licensed, where sports betting can happen, and which occasions are open to speculation - with big ramifications for the size of the marketplace.
Potential revenue varieties from $4.2 bn to practically $20bn every year depending upon aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I think many 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 require time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual income.
But bookmakers face a far different landscape in America than they perform in the UK, where sports betting shops are a frequent sight.
US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip until 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 lots of forms of online gambling, in spite of a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting wagering is typically seen in its own category, "it plainly stays to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.
Now an expert, he says UK firms must approach the marketplace carefully, selecting partners with caution and avoiding errors that might lead to regulator reaction.
"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is a chance for organization," he states. "It actually is dependent on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of income as an "integrity fee".
International companies deal with the added challenge of a powerful existing gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to protect their grass.
Analysts say UK firms will require to strike collaborations, providing their competence and innovation in order to make inroads.
They point to SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.
"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley said.
'It will just depend'
Joe Asher, chief 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 companies to develop an existence in Nevada.
William Hill now utilizes about 450 individuals in the US and has actually announced partnerships with casinos in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has invested millions together with a local designer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually become a household name in Nevada but that's not necessarily the objective all over.
"We definitely mean to have a really substantial brand presence in New Jersey," he stated. "In other states, it will simply depend upon policy and potentially who our regional partner is."
"The US is going to be the biggest sports betting market worldwide," he added. "Obviously that's not going to occur on the first day."
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