UK 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, brand-new guidelines on betting entered effect in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
The market sees a "as soon as in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are facing debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly opportune.
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But the industry says counting on the US stays a risky bet, as UK companies deal with complex state-by-state policy and competition from entrenched local interests.
"It's something that we're actually focusing on, however equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.
'Take 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 released in January.
Firms are hoping to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.
The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional legislators.
That is expected to cause substantial variation in how firms get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with big ramifications for the size of the market.
Potential profits ranges from $4.2 bn to practically $20bn every year depending upon elements like the number of states move to legalise, Oxford Economics estimated in a 2017 research 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 consultants KPMG.
Now, he said: "I believe many 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, developing a market with about $6bn in annual profits.
But bookmakers deal with a far different landscape in America than they do 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 till 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 likewise been sluggish to legalise lots of forms of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate challenges.
While sports betting is usually seen in its own category, "it plainly remains to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.
David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a consultant, he states UK firms should approach the marketplace thoroughly, picking partners with care and preventing bad moves that might cause regulator reaction.
"This is a chance for the American sports betting bettor ... I'm not sure whether it is a chance for company," he states. "It truly is dependent on the result of [state] legislation and how the company operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to collect a percentage of profits as an "integrity fee".
International companies deal with the added difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are seeking to protect their turf.
Analysts state UK firms will need to strike partnerships, using their competence and technology in order to make inroads.
They indicate SBTech's recent announcement that it is supplying 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 everyone, 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 truths.
The company has actually been investing in the US market considering that 2011, when it bought 3 US firms to establish a presence in Nevada.
William Hill now employs about 450 people in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has invested millions together with a local developer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually become a home name in Nevada but that's not necessarily the objective all over.
"We certainly intend to have a really significant brand name presence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our regional partner is."
"The US is going to be the biggest sports betting market worldwide," he included. "Obviously that's not going to take place on day one."
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