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

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on sports betting entered into result in Delaware, a small east coast state about two hours from Washington.

Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

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

For UK firms, which are facing debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry states counting on the US stays a risky bet, as UK companies face complicated state-by-state policy and competition from established local interests.

"It's something that we're truly focusing on, but similarly we do not wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.
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'Require time'

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

Firms are wishing to use more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.

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 question to local legislators.

That is anticipated to cause significant variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the market.

Potential profits ranges from $4.2 bn to nearly $20bn every year depending on factors like how many states move 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 think many people ... are looking at this as, 'it's a chance 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 earnings.

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.

US laws minimal gambling largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.
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In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.

States have likewise been sluggish to legalise lots of kinds of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to eliminate barriers.

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

David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he states UK firms should approach the market carefully, picking partners with caution and avoiding mistakes that could lead to regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to gather a portion of earnings as an "integrity cost".

International companies face the added obstacle of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to defend their turf.

Analysts say UK firms will require to strike collaborations, providing their expertise 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 kind of offers most likely to materialise.

"It will be a win-win for everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The business has been buying the US market considering that 2011, when it bought three US firms to establish an existence in Nevada.

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

It works as danger 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 ended up being a family name in Nevada but that's not necessarily the goal all over.

"We certainly plan to have a really considerable brand name presence in New Jersey," he stated. "In other states, it will just depend upon policy and possibly who our regional 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 occur on day one."

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