UK sports betting companies gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, new rules on sports betting came 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 first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
The market sees a "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
For UK firms, which are grappling with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly appropriate.
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But the industry states depending on the US remains a dangerous bet, as UK companies deal with complicated state-by-state guideline and competitors from established regional interests.
"It's something that we're actually focusing on, but similarly we don't desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.
'Take some time'
The US accounted for 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 wishing to use more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a few 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, leaving that question to local legislators.
That is expected to lead to considerable variation in how companies get certified, where sports betting wagering can occur, and which events are open to speculation - with big ramifications for the size of the marketplace.
Potential profits ranges from $4.2 bn to almost $20bn each year depending on elements like how lots of states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe the majority of people ... are looking 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 take some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in yearly income.
But bookmakers face a far different landscape in America than they carry out in the UK, where wagering stores are a regular sight.
US laws restricted gambling largely 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 sluggish to legalise numerous types of online gambling, in spite of a 2011 Justice Department opinion that appeared to remove challenges.
While sports betting wagering is normally seen in its own classification, "it clearly remains to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a consultant, he states UK companies need to approach the market carefully, picking partners with care and preventing mistakes that might cause regulator reaction.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is an opportunity for business," he says. "It really is dependent on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to gather a percentage of profits as an "stability charge".
International business face the included challenge of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to protect their turf.
Analysts say UK firms will require to strike collaborations, offering their competence and innovation in order to make inroads.
They point to SBTech's recent statement that it is providing 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 everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The business has actually been purchasing the US market since 2011, when it acquired 3 US firms to establish an existence in Nevada.
William Hill now utilizes about 450 individuals in the US and has revealed partnerships with casinos 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 said William Hill has actually become a family name in Nevada however that's not necessarily the goal everywhere.
"We definitely plan to have a really significant brand presence in New Jersey," he stated. "In other states, it will just depend on regulation and possibly who our local partner is."
"The US is going to be the greatest sports betting wagering market on the planet," he added. "Obviously that's not going to take place on the first day."
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