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 companies as sports betting wagering starts to spread out in America.
From Tuesday, new rules on wagering entered into impact in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The changes are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.
The industry sees a "once in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are grappling with debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.
Why the gambling market deals with an unsure future
How does prohibited sports betting work and what are the worries?
But the industry says counting on the US remains a risky bet, as UK business face complex state-by-state guideline and competitors from entrenched regional interests.
"It's something that we're really focusing on, however equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming profits last year, according to a report by Technavio, external published in January.
Firms are wanting to tap into more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting.
The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to regional legislators.
That is anticipated to result in substantial variation in how firms get accredited, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the market.
Potential earnings ranges from $4.2 bn to nearly $20bn yearly depending upon aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe most individuals ... 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 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 type by 2023, producing a market with about $6bn in annual earnings.
But bookmakers face a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.
US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip up until fairly 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 slow to legalise many forms of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove barriers.
While sports betting wagering is generally viewed in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the former president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.
Now an expert, he says UK firms must approach the marketplace carefully, picking partners with caution and avoiding mistakes that might result in regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm unsure whether it is an opportunity for company," he states. "It truly is dependent on the result of [state] legislation and how the organization operators pursue the opportunity."
'It will be collaborations'
As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a portion of profits as an "stability cost".
International companies face the added difficulty of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are seeking to safeguard their grass.
Analysts say UK companies will need to strike partnerships, providing their expertise and technology in order to make inroads.
They indicate SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.
"It will be a win-win for everybody, but it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has actually been purchasing the US market since 2011, when it bought three US firms to develop an existence in Nevada.
William Hill now employs about 450 people in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has actually invested millions alongside a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has become a household name in Nevada however that's not always the objective everywhere.
"We certainly plan to have a really significant brand name existence in New Jersey," he said. "In other states, it will just depend upon regulation and possibly who our regional partner is."
"The US is going to be the biggest sports betting wagering market on the planet," he included. "Obviously that's not going to happen on the first day."
US ruling opens way for sports betting wagering
14 May 2018
Paddy Power buys dream sports betting site
23 May 2018
