UK sports betting firms gamble on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business reporter, New York
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It's high stakes for UK companies as sports betting wagering starts to spread out in America.

From Tuesday, new guidelines on wagering entered into impact 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 could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.

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

For UK companies, which are grappling with combination, increased online competition and tougher rules from UK regulators, the timing is particularly opportune.

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But the market says relying on the US stays a risky bet, as UK companies face complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're actually concentrating on, however similarly we do not desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently bought the US dream sports betting website FanDuel.

'Require time'

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

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

The ruling found 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 lawmakers.

That is anticipated to result in substantial variation in how firms get accredited, where sports betting can occur, and which events are open to speculation - with huge implications for the size of the market.

Potential revenue ranges from $4.2 bn to practically $20bn each year depending on aspects like the number of states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I believe many 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in annual income.

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

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

In the popular creativity, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
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States have actually also been slow to legalise lots of kinds of online gambling, despite a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting wagering is usually seen in its own classification, "it clearly remains to be seen whether it gets the sort of think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.

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

Now a consultant, he says UK firms need to approach the marketplace carefully, choosing partners with care and preventing bad moves that could cause regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to gather a percentage of earnings as an "stability fee".
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International business deal with the included challenge of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to safeguard their turf.
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Analysts state UK companies will require to strike collaborations, providing their know-how and innovation in order to make inroads.

They indicate SBTech's current statement that it is offering technology 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, but it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has actually been investing in the US market considering that 2011, when it bought 3 US companies to establish an existence in Nevada.
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William Hill now uses about 450 people in the US and has actually announced 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 designer in a New Jersey horse racing track.

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

"We certainly intend to have a very substantial brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and possibly who our regional partner is."

"The US is going to be the greatest sports betting market on the planet," he included. "Obviously that's not going to take place on the first day."

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