UK wagering 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 companies as sports betting wagering starts to spread out in America.
From Tuesday, new rules on wagering entered 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 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 permit sports betting.
The market sees a "once in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with combination, increased online competition and harder rules from UK regulators, the timing is particularly opportune.
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But the market says counting on the US stays a dangerous bet, as UK business face complex state-by-state guideline and competitors from established local interests.
"It's something that we're actually concentrating on, however similarly we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, according to a report by Technavio, external published 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 judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that concern to regional lawmakers.
That is expected to cause substantial variation in how firms get certified, where sports betting can take place, and which events are open to speculation - with big implications for the size of the market.
Potential income varieties from $4.2 bn to practically $20bn annually depending upon factors like how lots of states move 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 big'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he stated: "I believe many people ... are taking a look at this as, 'it's an opportunity 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, anticipates that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in annual income.
But bookies deal with a far various landscape in America than they do in the UK, where betting shops are a regular sight.
US laws limited betting mainly to Native American lands and Nevada's Las Vegas strip until 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 also been sluggish to legalise many types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to get rid of obstacles.
While sports betting wagering is generally seen in its own classification, "it clearly remains to be seen whether it gets the type of momentum individuals think it will," stated 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 overseas online sportsbook and served prison time.
Now an expert, he states UK firms should approach the marketplace carefully, choosing partners with care and avoiding bad moves that might cause regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is a chance for organization," he says. "It really is dependent on the result of [state] legislation and how the service operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to collect a portion of earnings as an "integrity cost".
International business deal with the added difficulty of an effective existing gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their grass.
Analysts state UK companies will need to strike partnerships, using their proficiency and technology in order to make inroads.
They point to SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
"It will be a win-win for everybody, however 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 realities.
The company has actually been investing in the US market because 2011, when it purchased three US firms to develop an existence in Nevada.
William Hill now employs about 450 individuals in the US and has revealed collaborations with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a home name in Nevada but that's not necessarily the goal everywhere.
"We definitely plan to have a really substantial brand name existence in New Jersey," he stated. "In other states, it will just depend on policy and potentially who our regional partner is."
"The US is going to be the biggest sports betting wagering market in the world," he added. "Obviously that's not going to occur on day one."
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