UK wagering companies bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK companies as sports betting wagering starts to spread in America.
From Tuesday, new guidelines on wagering entered impact in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The changes are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
The market sees a "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are coming to grips with consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.
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But the industry states depending on the US remains a risky bet, as UK companies deal with complicated state-by-state guideline and competition from established regional interests.
"It's something that we're really focusing on, but similarly we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US fantasy sports betting site FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, according to a report by Technavio, external published in January.
Firms are wanting to use more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.
The judgment 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 local lawmakers.
That is expected to lead to significant variation in how firms get licensed, where sports betting can take place, and which events are open to speculation - with huge ramifications for the size of the market.
Potential revenue ranges from $4.2 bn to nearly $20bn each year depending on elements like the number of states move 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 substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I think a lot of individuals ... 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 in some type by 2023, creating a market with about $6bn in annual income.
But bookmakers face a far different landscape in America than they perform in the UK, where betting shops are a regular sight.
US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise many types of online betting, despite a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting wagering is generally viewed in its own category, "it clearly remains to be seen whether it gets the type of momentum individuals think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering 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 jail time.
Now an expert, he says UK companies ought to approach the marketplace carefully, selecting partners with caution and avoiding errors that might lead to regulator backlash.
"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for company," he states. "It really depends on the result of [state] legislation and how business operators pursue the opportunity."
'It will be partnerships'
As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a portion of revenue as an "integrity charge".
International companies deal with the included obstacle of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to protect their turf.
Analysts state UK firms will require to strike partnerships, offering their expertise and technology in order to make inroads.
They indicate SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.
"It will be a win-win for everyone, but it will be collaborations 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 truths.
The business has been buying the US market since 2011, when it bought 3 US companies to develop an existence in Nevada.
William Hill now employs about 450 people in the US and has announced collaborations with gambling establishments 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 stated William Hill has actually ended up being a home name in Nevada however that's not always the goal all over.
"We certainly plan to have an extremely substantial brand name existence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our local 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 occur on day one."
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