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

5 June 2018

By Natalie Sherman
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Business reporter, New York

It's high stakes for UK companies as sports betting starts to spread in America.

From Tuesday, brand-new rules on sports betting came into impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could start accepting sports betting bets as early as Friday.
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The modifications are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

The market sees a "when in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK firms, which are grappling with combination, increased online competition and tougher guidelines from UK regulators, the timing is especially appropriate.

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But the market states counting on the US stays a dangerous bet, as UK companies deal with complicated state-by-state guideline and competition from established local interests.

"It's something that we're really concentrating on, but equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

'Take time'
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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 take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to local legislators.

That is expected to lead to significant variation in how firms get certified, where sports betting can happen, and which events are open to speculation - with huge implications for the size of the .

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending on factors like the number of states relocate 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 substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I believe most people ... are taking a look 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 some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in yearly income.

But bookmakers face a far various landscape in America than they carry out in the UK, where sports betting shops are a regular sight.

US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip till reasonably just recently.

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

States have also been sluggish to legalise lots of forms of online gambling, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting is generally seen in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the previous primary executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he says UK firms should approach the marketplace carefully, choosing partners with caution and avoiding bad moves that might result in regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is a chance for company," he states. "It really is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a portion of revenue as an "integrity fee".

International business face the added obstacle of a powerful existing gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to safeguard their turf.

Analysts state UK companies will require to strike partnerships, using their expertise and technology in order to make inroads.

They indicate SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.

"It will be a win-win for everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

Joe Asher, president at William Hill US, is clear-eyed about the realities.
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The business has been buying the US market because 2011, when it bought 3 US firms to establish a presence in Nevada.

William Hill now uses about 450 people in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has become a household name in Nevada however that's not always the goal everywhere.
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"We definitely mean to have a very significant brand name existence in New Jersey," he stated. "In other states, it will just depend upon regulation and potentially who our local partner is."

"The US is going to be the most significant sports betting wagering market on the planet," he included. "Obviously that's not going to happen on day one."

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