UK wagering firms gamble on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK firms as sports betting starts to spread in America.
From Tuesday, brand-new guidelines on wagering entered 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 modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.
The industry sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is particularly appropriate.
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But the industry says counting on the US stays a dangerous bet, as UK companies face complicated state-by-state policy and competitors from entrenched regional interests.
"It's something that we're really focusing on, however equally we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming profits last year, 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 overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.
The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to local legislators.
That is expected to result in significant variation in how firms get licensed, where sports betting wagering can take place, and which events are open to speculation - with huge implications for the size of the marketplace.
Potential income ranges from $4.2 bn to practically $20bn every year depending upon elements like how many states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I think the majority of people ... are looking 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, anticipates that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual profits.
But bookmakers face a far different landscape in America than they carry out in the UK, where wagering stores are a frequent sight.
US laws limited gambling mostly to Native American lands and Nevada's Las Vegas strip until fairly recently.
In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have actually likewise been slow to legalise many forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.
While sports betting wagering is typically viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the previous primary executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.
Now an expert, he says UK firms must approach the market thoroughly, choosing partners with care and avoiding bad moves that could result in regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is an opportunity for company," he states. "It truly is reliant on the outcome of [state] legislation and how the company operators pursue the opportunity."
'It will be partnerships'
As legalisation begins, sports betting firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to gather a portion of income as an "stability fee".
International companies face the added obstacle of an effective existing gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to protect their grass.
Analysts say UK firms will require to strike collaborations, offering their competence and technology in order to make inroads.
They indicate SBTech's recent statement that it is providing innovation 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 stated.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has been investing in the US market because 2011, when it acquired three US firms to develop a presence in Nevada.
William Hill now uses about 450 people in the US and has actually revealed 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 developer in a New Jersey horse racing track.
Mr Asher stated William Hill has actually ended up being a home name in Nevada but that's not necessarily the goal everywhere.
"We certainly intend to have a very significant brand existence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our regional partner is."
"The US is going to be the most significant sports betting wagering market on the planet," he added. "Obviously that's not going to occur on the first day."
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