UK wagering 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 companies as sports betting wagering starts to spread out in America.
From Tuesday, brand-new guidelines on sports betting came 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 changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.
The market sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK firms, which are coming to grips with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.
Why the sports betting industry faces an unpredictable future
How does illegal sports betting wagering work and what are the fears?
But the industry says depending on the US remains a risky bet, as UK business face complex state-by-state policy and competitors from entrenched regional interests.
"It's something that we're truly concentrating on, however equally we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external released in January.
Firms are intending to tap into more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting.
The ruling found 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 legislators.
That is anticipated to lead to substantial variation in how firms get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with big implications for the size of the market.
Potential income ranges from $4.2 bn to practically $20bn yearly depending on aspects like how lots 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 stated: "I believe the majority of 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 some time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual revenue.
But bookies face a far various landscape in America than they carry out in the UK, where sports betting shops are a frequent sight.
US laws minimal gambling 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 also been sluggish to legalise numerous types of online gaming, in spite of a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting is generally seen in its own classification, "it clearly remains to be seen whether it gets the type of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he states UK firms need to approach the marketplace thoroughly, selecting partners with care and preventing errors that could result in regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is an opportunity for company," he says. "It truly is reliant on the outcome of [state] legislation and how the service operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to gather a percentage of earnings as an "stability fee".
International companies deal with the included difficulty of an effective existing gaming industry, with casino operators, state-run lottos and Native American tribes that are looking for to defend their turf.
Analysts state UK companies will need to strike collaborations, offering their know-how and innovation in order to make inroads.
They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
"It will be a win-win for everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley said.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has actually been investing in the US market given that 2011, when it acquired three US companies to develop a presence in Nevada.
William Hill now employs about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has actually invested millions along with a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a family name in Nevada however that's not always the objective all over.
"We certainly intend to have a really considerable brand name presence in New Jersey," he stated. "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 included. "Obviously that's not going to happen on the first day."
US judgment opens way for sports betting
14 May 2018
Paddy Power buys fantasy sports betting site
23 May 2018
