UK wagering companies gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK companies as sports betting wagering starts to spread out in America.
From Tuesday, new rules on sports betting entered impact in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.
The industry sees a "as soon as in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are facing consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.
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But the industry says counting on the US remains a risky bet, as UK companies face complex state-by-state regulation and competition from entrenched local interests.
"It's something that we're truly concentrating on, but similarly we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.
'Take some time'
The US accounted for 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 take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond 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 actually legalise sports betting wagering, leaving that concern to regional lawmakers.
That is expected to result in considerable variation in how companies get certified, where sports betting wagering can take place, and which occasions are open to speculation - with big ramifications for the size of the marketplace.
Potential income varieties from $4.2 bn to practically $20bn each year depending on elements 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 big'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I believe the majority of people ... are taking a look at this as, 'it's an opportunity 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, 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 annual earnings.
But bookies deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.
US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip till fairly just recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise many kinds of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.
While sports betting wagering is generally seen in its own category, "it plainly remains to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the previous primary executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he says UK companies should approach the marketplace thoroughly, choosing partners with caution and avoiding bad moves that could lead to regulator backlash.
"This is a chance for the American sports betting bettor ... I'm unsure whether it is an opportunity for service," he says. "It actually depends on the outcome of [state] legislation and how the organization operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to gather a portion of profits as an "integrity fee".
International companies face the added challenge of a powerful existing video gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to defend their turf.
Analysts say UK companies will need to strike collaborations, using their proficiency and technology in order to make inroads.
They indicate SBTech's recent announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.
"It will be a win-win for everyone, however it will be collaborations 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 actually been investing in the US market given that 2011, when it purchased 3 US companies to develop an existence in Nevada.
William Hill now uses about 450 people in the US and has actually 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 household name in Nevada however that's not always the goal everywhere.
"We definitely intend to have a really significant brand name presence in New Jersey," he stated. "In other states, it will just depend on policy and possibly who our local partner is."
"The US is going to be the greatest sports betting market worldwide," he added. "Obviously that's not going to take place on day one."
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