UK sports betting companies bet on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, new guidelines on sports betting entered into effect in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
The market sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with combination, increased online competition and tougher rules from UK regulators, the timing is particularly suitable.
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But the market states depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competition from entrenched local interests.
"It's something that we're actually concentrating on, but equally we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, according to a report by Technavio, external released in January.
Firms are wanting to tap into 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 ruling discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that question to local legislators.
That is expected to cause significant variation in how firms get licensed, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the market.
Potential income ranges from $4.2 bn to practically $20bn each year depending upon elements like the number of states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe a lot of people ... are taking a look at this as, 'it's an opportunity but it's not going to be $20bn and it's going to be state by state and it's going to take some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in yearly profits.
But bookies deal with a far various landscape in America than they carry out in the UK, where sports betting shops are a frequent sight.
US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip until fairly 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 forms of online gambling, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.
While sports betting wagering is typically viewed in its own category, "it clearly remains to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a specialist, he states UK firms should approach the marketplace carefully, picking partners with caution and preventing missteps that might cause regulator reaction.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is an opportunity for company," he states. "It really is reliant on the result of [state] legislation and how the business operators pursue the opportunity."
'It will be collaborations'
As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of profits as an "stability fee".
International business deal with the included challenge of an effective existing gaming market, with casino operators, state-run lottery games and Native American people that are looking for to defend their grass.
Analysts state UK companies will need to strike partnerships, using their expertise and innovation in order to make inroads.
They point to SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.
"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley said.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The business has actually been purchasing the US market given that 2011, when it bought three US companies to establish a presence in Nevada.
William Hill now utilizes about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has actually invested millions together with a regional 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 always the objective everywhere.
"We definitely plan to have a very considerable brand name existence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our local partner is."
"The US is going to be the greatest sports betting wagering market in the world," he added. "Obviously that's not going to happen on day one."
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