UK wagering firms bet 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 wagering starts to spread out in America.
From Tuesday, new guidelines on wagering entered result in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.
The market sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are facing consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.
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But the industry states depending on the US remains a dangerous bet, as UK companies deal with complicated state-by-state regulation and competition from established regional interests.
"It's something that we're truly concentrating on, but similarly we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
'Take some time'
The US accounted for 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 take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond 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 local legislators.
That is expected to result in considerable variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.
Potential profits varieties from $4.2 bn to almost $20bn annually depending upon factors like the number of states move to legalise, Oxford Economics estimated 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 consultants KPMG.
Now, he said: "I believe many people ... are taking a look 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 take some time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in yearly earnings.
But bookies deal with a far various landscape in America than they do in the UK, where wagering stores are a regular sight.
US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip until relatively just recently.
In the popular creativity, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to get rid of challenges.
While sports betting wagering is generally seen in its own category, "it clearly stays to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the previous president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he says UK firms ought to approach the marketplace carefully, choosing partners with caution and preventing mistakes that might lead to regulator backlash.
"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is an opportunity for company," he states. "It truly is dependent on the result of [state] legislation and how the company operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity charge".
International business deal with the added difficulty of an effective existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their turf.
Analysts say UK companies will require to strike partnerships, offering their know-how and technology in order to make inroads.
They point to SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.
"It will be a win-win for everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has been buying the US market since 2011, when it acquired 3 US firms to establish an existence in Nevada.
William Hill now employs about 450 individuals in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has become a home name in Nevada but that's not always the goal everywhere.
"We certainly plan to have an extremely significant brand name existence in New Jersey," he said. "In other states, it will simply depend on regulation 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 the first day."
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