UK betting firms bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, new guidelines on betting 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 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 "once in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with consolidation, increased online competitors 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 complicated state-by-state policy and competition from entrenched regional interests.
"It's something that we're really concentrating on, however similarly we don't desire to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming profits last year, according to a report by Technavio, external released in January.
Firms are intending to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.
The ruling discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional lawmakers.
That is anticipated to cause significant variation in how firms get licensed, where sports betting can occur, and which events 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 upon aspects 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 huge'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I think many people ... are looking at this as, 'it's a chance however 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, anticipates that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly revenue.
But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting shops are a regular sight.
US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip till relatively just recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise numerous kinds of online gaming, despite a 2011 Justice Department viewpoint that appeared to remove challenges.
While sports betting wagering is normally seen in its own category, "it plainly stays 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 wagering guideline.
David Carruthers is the former primary executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a consultant, he states UK companies must approach the market carefully, choosing partners with care and preventing errors that might lead to regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is a chance for service," he states. "It truly depends on the outcome of [state] legislation and how the business 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 wish to gather a portion of profits as an "stability cost".
International companies face the included challenge of an effective existing gaming industry, with casino operators, state-run lottery games and Native American people that are seeking to defend their turf.
Analysts state UK companies will need to strike collaborations, using their knowledge and technology in order to make inroads.
They indicate SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.
"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has been buying the US market given that 2011, when it acquired three US companies to develop an existence in Nevada.
William Hill now uses about 450 people in the US and has revealed partnerships 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 said William Hill has ended up being a home name in Nevada however that's not always the objective all over.
"We definitely intend to have a very considerable brand presence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our local 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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