UK sports betting firms gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting starts to spread out in America.
From Tuesday, new guidelines on wagering entered into effect in Delaware, a small east coast state about two hours from Washington.
Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.
The industry sees a "once in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.
For UK companies, which are coming to grips with debt consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.
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But the industry says counting on the US remains a dangerous bet, as UK business deal with complex state-by-state regulation and competitors from entrenched local interests.
"It's something that we're actually focusing on, however similarly we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income last year, according to a report by Technavio, external released in January.
Firms are intending to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred 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 local legislators.
That is anticipated to result in significant variation in how companies get accredited, where sports betting can occur, and which events are open to speculation - with big implications for the size of the market.
Potential profits ranges from $4.2 bn to almost $20bn annually depending upon aspects like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I think many people ... are looking 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 time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in annual income.
But bookmakers face a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.
US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip until fairly just recently.
In the popular imagination, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise many forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.
While sports betting is usually seen in its own category, "it plainly remains to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the previous president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.
Now a specialist, he says UK firms need to approach the marketplace thoroughly, picking partners with caution and preventing missteps that might cause regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is a chance for company," he states. "It actually is reliant on the outcome of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to collect a portion of income as an "stability charge".
International companies face the added obstacle of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to protect their turf.
Analysts say UK firms will require to strike collaborations, offering their knowledge and innovation 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 type of deals likely to materialise.
"It will be a win-win for everybody, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The business has been investing in the US market given that 2011, when it bought three US companies to develop a presence in Nevada.
William Hill now employs about 450 individuals in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a home name in Nevada however that's not necessarily the objective everywhere.
"We certainly plan to have a very substantial brand existence in New Jersey," he said. "In other states, it will simply depend on policy and possibly who our regional partner is."
"The US is going to be the most significant sports betting market on the planet," he included. "Obviously that's not going to occur on the first day."
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