UK wagering firms gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, new rules on sports betting entered result in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The changes are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
The market sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.
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But the industry says counting on the US stays a dangerous bet, as UK companies deal with complex state-by-state guideline and competition from established regional interests.
"It's something that we're really concentrating on, however equally we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits last year, according to a report by Technavio, external released in January.
Firms are wanting to take advantage of 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 wagering.
The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to local legislators.
That is expected to result in substantial variation in how firms get licensed, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the market.
Potential income varieties from $4.2 bn to nearly $20bn every year depending upon factors like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he stated: "I believe many 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 take time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual revenue.
But bookmakers face a far different landscape in America than they do in the UK, where betting stores are a regular sight.
US laws restricted betting mainly to Native American lands and Nevada's Las Vegas strip up until relatively recently.
In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise lots of kinds of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting is normally viewed in its own classification, "it clearly remains to be seen whether it gets the sort of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.
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 a specialist, he states UK firms ought to approach the market carefully, picking partners with care and preventing mistakes that might cause regulator backlash.
"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for service," he says. "It truly is reliant on the outcome of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to collect a percentage of earnings as an "stability charge".
International companies deal with the included obstacle of a powerful existing gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to defend their grass.
Analysts say UK companies will need to strike partnerships, using their know-how and innovation in order to make inroads.
They indicate SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort 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 said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The business has been buying the US market considering that 2011, when it acquired three US firms to develop an existence in Nevada.
William Hill now employs about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has invested millions together with a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has become a family name in Nevada however that's not always the goal everywhere.
"We definitely plan to have a really substantial brand name existence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our regional partner is."
"The US is going to be the biggest sports betting market on the planet," he included. "Obviously that's not going to happen on day one."
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