UK sports betting firms gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK firms as sports betting starts to spread in America.
From Tuesday, new guidelines on wagering entered into impact in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey might 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 allow 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 analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.
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But the industry states relying on the US stays a dangerous bet, as UK business face complex state-by-state policy and competitors from established local interests.
"It's something that we're really focusing on, but similarly we do not desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external published in January.
Firms are hoping to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond 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 really legalise sports betting wagering, leaving that question to local legislators.
That is anticipated to cause significant variation in how companies get certified, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the market.
Potential revenue varieties from $4.2 bn to almost $20bn yearly depending upon aspects like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I believe a lot of individuals ... are looking 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 wagering in some kind by 2023, producing a market with about $6bn in annual revenue.
But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting shops are a frequent sight.
US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.
While sports betting wagering is generally seen in its own classification, "it clearly stays to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the previous president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a consultant, he says UK firms must approach the marketplace carefully, selecting partners with care and avoiding bad moves that could result in regulator backlash.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is an opportunity for organization," he says. "It truly is dependent on the result of [state] legislation and how the service operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of earnings as an "integrity cost".
International business face the added difficulty of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to safeguard their turf.
Analysts say UK companies will require to strike collaborations, providing their know-how and innovation in order to make inroads.
They indicate SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.
"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The company has been investing in the US market because 2011, when it bought three US firms to develop a presence in Nevada.
William Hill now employs about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.
It works as threat supervisor for the Delaware Lottery and has actually invested millions together with a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually ended up being a household name in Nevada however that's not necessarily the goal all over.
"We definitely plan to have a really substantial brand presence in New Jersey," he stated. "In other states, it will just depend upon guideline and possibly who our regional partner is."
"The US is going to be the most significant sports betting wagering market on the planet," he included. "Obviously that's not going to happen on the first day."
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