UK wagering firms gamble on US after sports betting wager judgment
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 sports betting entered into effect 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 modifications are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.
The market sees a "when in a generation" opportunity to develop a 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 coming to grips with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially appropriate.
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But the market says counting on the US remains a risky bet, as UK companies deal with complex state-by-state regulation and competitors from entrenched local interests.
"It's something that we're truly focusing on, but similarly we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US fantasy sports betting site FanDuel.
'Take 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 published in January.
Firms are intending to use more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.
The judgment 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 lawmakers.
That is expected to result in significant variation in how firms get licensed, where sports betting can occur, and which events are open to speculation - with big implications for the size of the marketplace.
Potential revenue ranges from $4.2 bn to nearly $20bn each year depending upon aspects like how many 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'", stated Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he stated: "I believe the majority of people ... are taking a look at this as, 'it's a chance however 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 type by 2023, producing a market with about $6bn in annual profits.
But bookmakers face a far various landscape in America than they perform in the UK, where sports betting stores are a regular sight.
US laws minimal sports betting mostly to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular creativity, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise many types of online gaming, despite a 2011 Justice Department viewpoint that appeared to remove challenges.
While sports betting is normally seen in its own classification, "it plainly remains to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.
Now an expert, he states UK firms ought to approach the marketplace carefully, choosing partners with caution and avoiding errors that could lead to regulator backlash.
"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for organization," he says. "It truly depends on the result of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of profits as an "integrity fee".
International business face the included challenge of an effective existing gaming market, with casino operators, state-run lotteries and Native American people that are seeking to defend their turf.
Analysts say UK companies will require to strike partnerships, using their know-how and innovation in order to make inroads.
They indicate SBTech's current statement that it is providing technology 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, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has been investing in the US market since 2011, when it bought three US firms to develop a presence in Nevada.
William Hill now utilizes about 450 people in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a home name in Nevada but that's not necessarily the goal everywhere.
"We certainly intend to have a really significant brand name existence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our local partner is."
"The US is going to be the greatest sports betting market in the world," he included. "Obviously that's not going to occur on the first day."
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