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UK sports betting companies gamble on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business press 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 wagering entered effect in Delaware, a small 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 become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.
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The market sees a "as soon as in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly suitable.

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But the industry states depending on the US remains a dangerous bet, as UK business face complicated state-by-state regulation and competitors from established regional interests.

"It's something that we're truly concentrating on, however equally we do not want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income in 2015, according to a report by Technavio, in January.

Firms are wanting to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.

The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional lawmakers.

That is expected to lead to substantial variation in how companies get accredited, where sports betting wagering can happen, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to practically $20bn yearly depending on aspects like the number of states transfer 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 big'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe many people ... are looking at this as, 'it's a chance but 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, producing a market with about $6bn in yearly earnings.

But bookies face a far different landscape in America than they do in the UK, where betting shops are a regular sight.

US laws limited betting largely to Native American lands and Nevada's Las Vegas strip till fairly recently.

In the popular creativity, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.

States have actually also been slow to legalise many kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting wagering is normally viewed in its own classification, "it plainly stays to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.

David Carruthers is the former chief executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.
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Now a consultant, he says UK companies ought to approach the marketplace carefully, picking partners with care and avoiding mistakes that could result in regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm not sure whether it is an opportunity for business," he states. "It actually is dependent on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a portion of earnings as an "stability fee".

International companies deal with the added difficulty of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to safeguard their grass.

Analysts state UK firms will require to strike partnerships, offering their proficiency and innovation in order to make inroads.

They point to SBTech's current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.

"It will be a win-win for everybody, however it will be collaborations and it will be driven by technology," Mr Hawkley stated.
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'It will just depend'

Joe Asher, president at William Hill US, is clear-eyed about the truths.

The business has been buying the US market considering that 2011, when it bought three US companies to establish a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has actually invested millions alongside a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually ended up being a family name in Nevada however that's not always the goal all over.

"We certainly plan to have an extremely significant brand name existence in New Jersey," he stated. "In other states, it will just depend upon regulation and possibly who our local 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 happen on day one."
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