UK wagering firms gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread in America.
From Tuesday, brand-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 changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
The market sees a "when in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK firms, which are coming to grips with combination, increased online competition and harder rules from UK regulators, the timing is especially suitable.
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But the market says counting on the US stays a dangerous bet, as UK companies face complex state-by-state regulation and competition from established regional interests.
"It's something that we're actually concentrating on, but equally we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings 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 barred states outside of Nevada and a couple of others from authorising sports betting.
The ruling 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 regional legislators.
That is expected to lead to considerable variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with huge implications for the size of the market.
Potential profits varieties from $4.2 bn to nearly $20bn yearly depending on factors like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I think the majority of people ... are taking a look at this as, 'it's a chance 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual earnings.
But bookies deal with a far various landscape in America than they perform in the UK, where wagering shops are a frequent sight.
US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip till 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 likewise been slow to legalise many types of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting wagering is generally viewed in its own category, "it clearly stays to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he says UK firms ought to approach the market thoroughly, picking partners with caution and avoiding mistakes that could result in regulator reaction.
"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is a chance for business," he states. "It really is reliant on the result of [state] legislation and how the service operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a portion of revenue as an "integrity charge".
International business deal with the added difficulty of a powerful existing gaming industry, with gambling establishment operators, state-run lottos and Native American people that are seeking to defend their grass.
Analysts say UK companies will need to strike partnerships, using their proficiency and technology in order to make inroads.
They point to SBTech's current announcement that it is offering 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 everybody, but it will be partnerships and it will be driven by technology," Mr Hawkley stated.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The company has actually been purchasing the US market given that 2011, when it bought 3 US firms to establish an existence in Nevada.
William Hill now employs about 450 people in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has become a household name in Nevada but that's not necessarily the objective all over.
"We certainly plan to have a really substantial brand presence in New Jersey," he stated. "In other states, it will simply depend on policy and possibly who our local partner is."
"The US is going to be the most significant sports betting wagering market on the planet," he added. "Obviously that's not going to happen on day one."
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