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UK sports betting companies gamble on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new guidelines on betting entered into effect in Delaware, a small east coast state about two hours from Washington.
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Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

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

The market sees a "once in a generation" opportunity to develop a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK companies, which are facing combination, increased online competitors and from UK regulators, the timing is especially opportune.

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But the industry says depending on the US stays a risky bet, as UK business face complicated state-by-state policy and competitors from established regional interests.

"It's something that we're truly concentrating on, however similarly we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Take time'

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

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

The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to local lawmakers.

That is expected to lead to significant variation in how firms get certified, where sports betting wagering can occur, and which occasions are open to speculation - with big ramifications for the size of the market.
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Potential income varieties from $4.2 bn to nearly $20bn annually depending on factors like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe the majority of people ... are taking a look 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 time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in annual income.

But bookies deal with a far various landscape in America than they perform in the UK, where wagering stores are a regular sight.

US laws restricted sports betting mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have likewise been slow to legalise lots of types of online betting, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

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

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

Now a specialist, he states UK firms should approach the marketplace thoroughly, choosing partners with caution and avoiding bad moves that might lead to regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to gather a percentage of earnings as an "integrity fee".

International business face the added difficulty of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to defend their grass.

Analysts state UK firms will need to strike partnerships, providing their proficiency and technology in order to make inroads.

They point to SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

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

'It will just depend'

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

The company has actually been investing in the US market since 2011, when it purchased three US firms to establish an existence in Nevada.

William Hill now uses about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.

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

Mr Asher said William Hill has ended up being a household name in Nevada however that's not necessarily the objective everywhere.

"We certainly plan to have an extremely significant brand existence in New Jersey," he said. "In other states, it will simply depend on guideline and potentially who our regional partner is."

"The US is going to be the biggest sports betting wagering market worldwide," he added. "Obviously that's not going to take place on day one."

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