UK sports betting firms gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK companies as sports betting wagering starts to spread in America.
From Tuesday, new guidelines on sports betting entered into effect in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might begin 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 method 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, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.
For UK companies, which are facing consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially suitable.
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But the industry states counting on the US remains a risky bet, as UK companies face complicated state-by-state guideline and competitors from established regional interests.
"It's something that we're really concentrating on, but equally we do not desire to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently acquired the US fantasy sports site FanDuel.
'Require time'
The US represented 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 hoping to use more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting wagering.
The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to regional legislators.
That is expected to cause substantial variation in how firms get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.
Potential profits varieties from $4.2 bn to nearly $20bn yearly depending on factors 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 big'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I believe the majority of 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, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in annual earnings.
But bookies face a far different landscape in America than they do in the UK, where wagering stores are a regular sight.
US laws minimal sports betting mostly to Native American lands and Nevada's Las Vegas strip until reasonably recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise numerous kinds of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.
While sports betting wagering is generally viewed in its own classification, "it clearly remains to be seen whether it gets the sort of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the former president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a consultant, he says UK companies ought to approach the market thoroughly, picking partners with care and preventing bad moves that could result in regulator reaction.
"This is an opportunity for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for service," he states. "It actually depends on the result of [state] legislation and how the business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which want to collect a portion of revenue as an "integrity charge".
International business face the added obstacle of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to protect their grass.
Analysts say UK firms will need to strike collaborations, using their knowledge and technology in order to make inroads.
They indicate SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.
"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The company has been buying the US market since 2011, when it acquired three US firms to develop a presence in Nevada.
William Hill now utilizes about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.
It works as danger 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 ended up being a household name in Nevada but that's not necessarily the objective all over.
"We certainly intend to have a very significant brand existence 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 biggest sports betting wagering market on the planet," he added. "Obviously that's not going to happen on the first day."
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