UK wagering companies gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK companies as sports betting wagering starts to spread out in America.
From Tuesday, new guidelines on sports betting entered result in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
The market sees a "as soon as in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK firms, which are facing consolidation, increased online competition and tougher rules from UK regulators, the timing is especially opportune.
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But the industry says counting on the US stays a dangerous bet, as UK business deal with complex state-by-state guideline and competitors from established regional interests.
"It's something that we're truly focusing on, however equally we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming profits in 2015, according to a report by Technavio, external published in January.
Firms are wishing to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of 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 wagering, leaving that question to regional lawmakers.
That is expected to result in substantial variation in how firms get accredited, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the marketplace.
Potential earnings varieties from $4.2 bn to practically $20bn every year depending on elements like how many states relocate 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 huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I believe many 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 time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in annual revenue.
But bookmakers deal with a far various landscape in America than they perform in the UK, where wagering shops are a regular sight.
US laws limited sports betting mostly to Native American lands and Nevada's Las Vegas strip up until reasonably recently.
In the popular creativity, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise numerous types of online gaming, in spite of a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting wagering is normally viewed in its own classification, "it plainly remains to be seen whether it gets the sort of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.
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 an expert, he states UK companies must approach the marketplace carefully, picking partners with caution and preventing missteps that could lead to regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for company," he says. "It truly depends on the result of [state] legislation and how the service operators pursue the opportunity."
'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 percentage of revenue as an "stability cost".
International business face the included challenge of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to protect their turf.
Analysts state UK companies will require to strike collaborations, offering their knowledge and innovation in order to make inroads.
They point to SBTech's recent statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
"It will be a win-win for everyone, however it will be collaborations 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 investing in the US market because 2011, when it acquired 3 US companies to develop an existence in Nevada.
William Hill now employs about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has invested millions along with a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a family name in Nevada but that's not necessarily the goal all over.
"We definitely plan to have an extremely substantial brand existence in New Jersey," he said. "In other states, it will just depend upon guideline and possibly who our regional partner is."
"The US is going to be the biggest sports betting market on the planet," he included. "Obviously that's not going to happen on day one."
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