UK wagering companies gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK companies as sports betting starts to spread in America.
From Tuesday, new guidelines on wagering 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 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 industry sees a "once in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based monetary expert 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 opportune.
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But the industry says relying on the US remains a risky bet, as UK business face complex state-by-state guideline and competition from established regional interests.
"It's something that we're really concentrating on, but similarly we don't desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income in 2015, according to a report by Technavio, external published in January.
Firms are intending to tap into more of that activity after last month's choice, which overruled a 1992 federal law that barred 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 really legalise sports betting wagering, leaving that question to regional legislators.
That is anticipated to lead to considerable variation in how companies get licensed, where sports betting wagering can take place, and which occasions are open to speculation - with big implications for the size of the market.
Potential profits ranges from $4.2 bn to nearly $20bn each year depending on factors like how numerous states relocate to legalise, Oxford Economics approximated in a 2017 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 think many individuals ... 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 time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly earnings.
But bookmakers deal with a far various landscape in America than they do in the UK, where wagering stores are a regular sight.
US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.
In the popular creativity, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise lots of kinds of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.
While sports betting is generally seen in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the previous primary executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a specialist, he says UK firms must approach the marketplace carefully, selecting partners with caution and preventing mistakes that could result in regulator backlash.
"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for business," he states. "It truly depends on the outcome of [state] legislation and how the company operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which desire to gather a percentage of income as an "integrity cost".
International companies face the added difficulty of a powerful existing gaming market, with casino operators, state-run lottery games and Native American people that are seeking to defend their grass.
Analysts state UK firms will need to strike partnerships, using their expertise and technology in order to make inroads.
They point to SBTech's current announcement that it is supplying innovation 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 everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley stated.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has actually been purchasing the US market because 2011, when it bought 3 US firms to develop a presence in Nevada.
William Hill now uses about 450 individuals in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as risk 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 become a household name in Nevada but that's not necessarily the goal everywhere.
"We certainly intend to have a very substantial brand existence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."
"The US is going to be the most significant sports betting wagering market on the planet," he included. "Obviously that's not going to take place on day one."
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