Sportech Eyes Up U.S. Market with New Deal

Sportech Eyes up U.S. Market with New Deal

European betting firms keen to cash in on newly legalized sports betting in the US have ambitious plans to infiltrate the U.S. market – UK-based Sportech is one.

Partnership

With the U.S. Supreme Court legalizing sports betting in the country, there are now a lot of opportunities for gambling companies to get in on the action. Casinos and betting companies in the U.S. and abroad are now scrambling to develop their sports betting offering for the American market.

Sportech, an online gambling company based in the United Kingdom, has just entered into a partnership it hopes will allow it to get a foot in the U.S. door.

The company has partnered with worldwide sports data firm Sportradar, which currently has significant partnerships with the likes of the NFL, NHL, MLB, and NBA.

Effect on college sports

A significant portion of the money wagered under the newly legalized sports betting industry is expected to be placed upon these major American sports. The American Gaming Association estimates that the market for illegal sports betting in the U.S. is worth $150bn (£112bn) annually. Doubts still linger about how the new laws will affect college sports in the country, with many being concerned that sports betting may affect the integrity of the college game.

Sportech plans to combine its betting technology with the data tools of Sportradar to cater for pre-game and in-play sports betting. The company is also currently involved with a total of 90 licensed operators in the U.S. who will also have access to the trading and risk management services Sportradar provides.

Of course, the company still has to wait and see what legislation permits in certain states before comprehensively deciding on its strategy for this new market.

It certainly looks to be a good fit as Sportradar has been involved in sports betting since 2001 under their Betradar brand, so it knows the industry well. It can look after everything, including pre-game odds, live data services and odds, liability and risk management services, betting stimulation tools, cutting-edge gaming solutions, and live streaming facilities.

Effectively, it is an all-in-one package for a betting operator like Sportech to utilize. Offerings, of course, can be tailored depending on the specific needs of the client.

They are certainly confident of delivering exactly what Sportech needs, with their vice president for gaming sales, Neale Deeley, saying: “Our turnkey solutions and market leading bookmaker services will accelerate their sportsbook offering and provide them with a strong advantage as other states pass sports betting legislation.”

What about other companies?

Following the announcement of the sports betting ban being thrown out, share prices of many major sports betting providers in Europe shot up. Paddy Power Betfair, for example, saw its valuation rise by £351m ($471m) on the back of this announcement.

With Paddy Power Betfair seeing share prices rise 12.24% following the announcement, their rival, William Hill, saw climbs of 10.71%. Paddy Power has already entered into a deal with U.S.-based fantasy sports site FanDuel, buying a 61% stake with an option to increase it to 100% in the next five years.

The Betfair U.S. branch of the company will merge with FanDuel, with £118m ($158m) being provided to pay-off current FanDuel debt and for the operations of the new business.  FanDuel is said to hold 40% of the market share in the daily fantasy sports market, with more than 7 million customers in the U.S.

This is seen as a stepping stone for Paddy Power Betfair to get involved in the sports betting market. It is clear that they expected sports betting to be legalized and they were well positioned to close this deal once the Supreme Court verdict was announced.

It is likely that a lot of other European gambling companies are going to follow the example of Sportech and Paddy Power Betfair in order to get a slice of the action.

However, some are calling for a cautious approach to be taken. Greg Bettinelli is a partner at Upfront Ventures and has been involved in numerous investments in the sports betting space. He outlined his thoughts when speaking to Inc. While he thinks that those companies focused on staying on the right side of regulations can do well, the battle for customers will lead to a race to zero margins and as a result: “There will be a few winners, but there will be way more losers.”

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