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UK sports betting firms bet 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 starts to spread out in America.

From Tuesday, new rules on wagering came into effect 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 might become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.

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

For UK firms, which are coming to grips with debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.

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But the market says relying on the US remains a dangerous bet, as UK companies face complex state-by-state policy and competitors from entrenched local interests.

"It's something that we're truly concentrating on, however equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.

'Require time'

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

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

The judgment discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to local lawmakers.

That is expected to result in considerable variation in how companies get accredited, where sports betting can occur, and which occasions are open to speculation - with big ramifications for the size of the market.

Potential income ranges from $4.2 bn to almost $20bn every year depending on factors like how numerous states 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 experts KPMG.
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Now, he said: "I think many people ... are taking a look 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, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in annual earnings.

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

US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have likewise been slow to legalise lots of forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting is typically seen in its own classification, "it plainly stays to be seen whether it gets the sort of momentum people think 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 previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a specialist, he says UK firms must approach the market thoroughly, picking partners with care and preventing errors that could cause regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of income as an "integrity charge".
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International business deal with the included challenge of a powerful existing video gaming market, with casino operators, state-run lottos and Native American people that are looking for to defend their grass.

Analysts state UK firms will require to strike partnerships, providing their know-how and technology in order to make inroads.

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

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

'It will simply depend'

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

The business has been investing in the US market given that 2011, when it bought three US companies to establish an existence in Nevada.

William Hill now utilizes about 450 people in the US and has actually announced partnerships 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 home name in Nevada however that's not necessarily the goal all over.

"We definitely plan to have a very substantial brand existence in New Jersey," he stated. "In other states, it will just depend upon policy and potentially who our regional partner is."

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

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