UK wagering firms gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK firms as sports betting starts to spread in America.
From Tuesday, brand-new guidelines on wagering entered impact in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The changes are the 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 wagering.
The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially opportune.
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But the industry says depending on the US remains a dangerous bet, as UK business face complex state-by-state regulation and competition from established regional interests.
"It's something that we're really concentrating on, but equally we do not wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, according to a report by Technavio, external published in January.
Firms are hoping to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.
The ruling found 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 regional legislators.
That is anticipated to cause considerable variation in how companies get licensed, where sports betting wagering can occur, and which events are open to speculation - with big ramifications for the size of the marketplace.
Potential revenue ranges from $4.2 bn to almost $20bn yearly depending on aspects like the number of states transfer 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'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I think 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 take some time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly income.
But bookmakers face a far different landscape in America than they do in the UK, where sports betting stores are a frequent sight.
US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip up until relatively just recently.
In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise numerous forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to get rid of obstacles.
While sports betting is usually seen in its own category, "it clearly remains to be seen whether it gets the type of momentum individuals 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 jail time.
Now a specialist, he states UK firms should approach the market carefully, picking partners with care and avoiding missteps that might lead to regulator backlash.
"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for service," he states. "It really depends on the outcome 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 desire to gather a portion of revenue as an "integrity fee".
International business deal with the included challenge of a powerful existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their turf.
Analysts state UK companies will require to strike collaborations, using their proficiency and technology in order to make inroads.
They point to SBTech's current statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.
"It will be a win-win for everyone, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
The business has actually been buying the US market given that 2011, when it acquired three US companies to establish a presence in Nevada.
William Hill now employs about 450 people in the US and has actually announced partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a family name in Nevada but that's not necessarily the goal everywhere.
"We certainly mean to have a really significant brand name existence in New Jersey," he said. "In other states, it will simply depend upon regulation and potentially who our local partner is."
"The US is going to be the most significant sports betting wagering market in the world," he included. "Obviously that's not going to take place on day one."
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