UK sports betting companies gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK firms as sports betting starts to spread in America.
From Tuesday, new guidelines on sports betting entered impact in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
The industry sees a "when in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who research study at Davy.
For UK firms, which are facing debt consolidation, increased online competition and harder rules from UK regulators, the timing is particularly appropriate.
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But the market states counting on the US remains a risky bet, as UK companies face complicated state-by-state regulation and competitors from entrenched regional interests.
"It's something that we're truly concentrating on, but equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US dream sports betting website 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 wishing 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 few others from authorising sports betting.
The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.
That is anticipated to lead to considerable variation in how companies get accredited, where sports betting can take place, and which events are open to speculation - with big implications for the size of the marketplace.
Potential income ranges from $4.2 bn to nearly $20bn annually depending on factors like how numerous 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'", stated Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I think a lot of people ... 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 require time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in yearly profits.
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 minimal gaming largely to Native American lands and Nevada's Las Vegas strip till relatively just recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise numerous types of online sports betting, despite a 2011 Justice Department opinion that appeared to remove barriers.
While sports betting wagering is usually seen in its own category, "it plainly remains to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the former primary executive of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a specialist, he says UK companies must approach the marketplace carefully, picking partners with care and avoiding mistakes that might result in regulator reaction.
"This is a chance for the American sports betting bettor ... I'm not sure whether it is an opportunity for service," he says. "It truly is dependent on the outcome of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which desire to gather a portion of profits as an "stability fee".
International business face the included challenge of an effective existing gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to protect their turf.
Analysts state UK companies will require to strike collaborations, providing their knowledge and technology in order to make inroads.
They indicate SBTech's recent statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.
"It will be a win-win for everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The business has actually been buying the US market because 2011, when it acquired 3 US companies to develop a presence in Nevada.
William Hill now employs about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has actually invested millions together with a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has actually ended up being a household name in Nevada however that's not always the objective everywhere.
"We definitely plan to have an extremely significant brand name presence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our regional partner is."
"The US is going to be the most significant sports betting wagering market in the world," he included. "Obviously that's not going to happen on day one."
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