UK sports betting companies gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting starts to spread in America.
From Tuesday, brand-new guidelines on wagering entered into result in Delaware, a tiny 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 permit sports betting.
The industry sees a "as soon as in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are facing consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.
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But the industry says counting on the US stays a dangerous bet, as UK business deal with complicated state-by-state guideline and competitors from established local interests.
"It's something that we're actually concentrating on, however similarly we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Take some 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 released in January.
Firms are hoping to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
The ruling 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 legislators.
That is anticipated to result in considerable variation in how companies get accredited, where sports betting can occur, and which occasions are open to speculation - with big ramifications for the size of the market.
Potential profits ranges from $4.2 bn to almost $20bn annually depending upon factors like how many states relocate to legalise, Oxford Economics approximated in a 2017 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 specialists KPMG.
Now, he said: "I believe the majority of 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 take some time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in yearly revenue.
But bookies deal with a far various landscape in America than they do in the UK, where wagering shops are a frequent sight.
US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise many forms of online sports betting, despite a 2011 Justice Department opinion that appeared to eliminate obstacles.
While sports betting is generally viewed in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people 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 jail time.
Now a specialist, he states UK companies should approach the marketplace carefully, picking partners with care and preventing mistakes that might result in regulator reaction.
"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is a chance for organization," he states. "It actually depends on the outcome of [state] legislation and how the service operators pursue the chance."
'It will be partnerships'
As legalisation begins, 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 profits as an "integrity fee".
International companies deal with the included obstacle of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their turf.
Analysts say UK firms will need to strike collaborations, offering their knowledge and technology in order to make inroads.
They point to SBTech's recent announcement that it is supplying technology 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 everyone, 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 realities.
The company has actually been investing in the US market given that 2011, when it purchased three US firms to establish a presence in Nevada.
William Hill now uses about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.
It works as threat manager 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 family name in Nevada but that's not necessarily the goal all over.
"We definitely mean to have a very significant brand existence in New Jersey," he stated. "In other states, it will just depend on policy and possibly who our local partner is."
"The US is going to be the biggest sports betting wagering market in the world," he added. "Obviously that's not going to happen on day one."
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