UK sports betting companies 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 effect in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The changes are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.
The industry sees a "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are coming to grips with debt consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially opportune.
Why the gambling market deals with an unsure future
How does illegal sports betting wagering work and what are the fears?
But the industry states counting on the US stays a risky bet, as UK business face complicated state-by-state policy and competition from entrenched local interests.
"It's something that we're actually focusing on, but similarly we don't wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income last year, according to a report by Technavio, external released in January.
Firms are wanting to use more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.
The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to regional lawmakers.
That is anticipated to lead to considerable variation in how firms get certified, where sports betting can occur, and which occasions are open to speculation - with huge ramifications for the size of the market.
Potential revenue varieties from $4.2 bn to practically $20bn every year depending upon factors like the number of states move to legalise, Oxford Economics approximated 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 consultants KPMG.
Now, he stated: "I think many people ... 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 take time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly income.
But bookmakers face a far different landscape in America than they perform in the UK, where sports betting shops are a regular sight.
US laws minimal sports betting mostly to Native American lands and Nevada's Las Vegas strip till fairly recently.
In the popular creativity, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been sluggish to legalise numerous forms of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.
While sports betting is usually seen in its own classification, "it plainly remains to be seen whether it gets the sort of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.
David Carruthers is the former chief executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a consultant, he says UK companies should approach the marketplace carefully, picking partners with caution and avoiding missteps that could cause regulator reaction.
"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for business," he says. "It really depends on the result of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which want to collect a percentage of revenue as an "stability cost".
International companies deal with the added obstacle of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to defend their grass.
Analysts say UK firms will need to strike collaborations, providing their competence and technology 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 kind of deals 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 realities.
The company has actually been investing in the US market given that 2011, when it acquired three US companies to develop an existence in Nevada.
William Hill now uses about 450 people in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.
It works as risk supervisor for the Delaware Lottery and has invested millions along with a regional designer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a household name in Nevada but that's not necessarily the objective everywhere.
"We certainly intend to have a really significant brand presence in New Jersey," he stated. "In other states, it will just depend upon regulation and possibly who our regional partner is."
"The US is going to be the greatest sports betting wagering market on the planet," he included. "Obviously that's not going to take place on day one."
US judgment opens method for sports betting wagering
14 May 2018
Paddy Power purchases fantasy sports betting website
23 May 2018
