UK sports betting companies bet 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 firms as sports betting starts to spread out in America.
From Tuesday, new rules on wagering entered into effect in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.
The market sees a "once in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are coming to grips with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.
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But the industry says counting on the US stays a dangerous bet, as UK business face complex state-by-state policy and competitors from established regional interests.
"It's something that we're actually concentrating on, but equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming profits last year, 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 overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.
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 concern to regional legislators.
That is anticipated to result in significant variation in how companies get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with big ramifications for the size of the market.
Potential income ranges from $4.2 bn to practically $20bn yearly depending upon elements like the number of states relocate to legalise, Oxford Economics approximated 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 stated: "I think the majority of people ... are taking a look 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 some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in annual income.
But bookies deal with a far various landscape in America than they carry out in the UK, where sports betting shops are a regular sight.
US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.
In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise lots of types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove barriers.
While sports betting wagering is typically seen in its own category, "it clearly stays to be seen whether it gets the type of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he says UK companies must approach the market thoroughly, picking partners with care and preventing mistakes that might cause regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is an opportunity for organization," he says. "It really depends on the result of [state] legislation and how the service operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which want to gather a portion of revenue as an "integrity charge".
International companies deal with the included challenge of a powerful existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to defend their turf.
Analysts state UK firms will need to strike collaborations, using their knowledge and technology in order to make inroads.
They point to SBTech's current statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
"It will be a win-win for everyone, however it will be partnerships 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 purchasing 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 actually revealed collaborations with casinos in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has actually invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a household name in Nevada but that's not necessarily the goal everywhere.
"We definitely intend to have a really significant brand existence in New Jersey," he said. "In other states, it will simply depend upon regulation and potentially who our regional partner is."
"The US is going to be the greatest sports betting wagering market in the world," he added. "Obviously that's not going to happen on the first day."
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