UK wagering firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, brand-new rules on sports betting entered result in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey could begin 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 enable sports betting.
The industry sees a "when in a generation" chance to develop a new market in sports betting-mad America, said 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 harder guidelines from UK regulators, the timing is especially appropriate.
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But the market states depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state regulation and competitors from entrenched regional interests.
"It's something that we're truly concentrating on, but similarly we do not wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.
'Take some time'
The US accounted for 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 wanting to tap into more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.
The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional lawmakers.
That is expected to result in significant variation in how companies get certified, where sports betting wagering can occur, and which occasions are open to speculation - with big ramifications for the size of the marketplace.
Potential income ranges from $4.2 bn to almost $20bn annually depending upon factors like the number of states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "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, handling 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 deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.
US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular creativity, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise numerous types of online sports betting, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting wagering is typically viewed in its own classification, "it plainly stays to be seen whether it gets the type of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.
Now an expert, he states UK firms need to approach the market thoroughly, picking partners with caution and preventing missteps that could cause regulator reaction.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is an opportunity for business," he states. "It really depends on the result of [state] legislation and how the company operators pursue the opportunity."
'It will be partnerships'
As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to gather a percentage of profits as an "integrity charge".
International companies face the added challenge of a powerful existing gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to defend their grass.
Analysts say UK companies will require to strike partnerships, providing their proficiency and innovation in order to make inroads.
They point to SBTech's recent announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of deals 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 stated.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The business has been purchasing the US market considering that 2011, when it purchased three US companies to develop a presence in Nevada.
William Hill now employs about 450 people in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has invested millions alongside a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a household name in Nevada but that's not necessarily the objective everywhere.
"We definitely intend to have an extremely significant brand presence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our regional partner is."
"The US is going to be the biggest sports betting market in the world," he included. "Obviously that's not going to occur on the first day."
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