UK wagering companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on sports betting came into impact in Delaware, a small east coast state about 2 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 end up being a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.

The market sees a "when in a generation" chance to develop 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 combination, increased online competition and harder rules from UK regulators, the timing is especially opportune.

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But the market states counting on the US remains a risky bet, as UK business face complex state-by-state regulation and competitors from entrenched regional interests.
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"It's something that we're truly concentrating on, but similarly we don't wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US dream sports betting website 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 released in January.

Firms are wishing to tap into 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.

The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, that concern to local legislators.

That is anticipated to cause significant variation in how companies get accredited, where sports betting can happen, and which occasions are open to speculation - with huge implications for the size of the market.

Potential profits ranges from $4.2 bn to nearly $20bn each year depending on aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

Now, he stated: "I think many people ... are looking 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, 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 yearly profits.
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But bookies deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.

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

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

States have also been sluggish to legalise many kinds of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.
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While sports betting wagering is generally viewed in its own category, "it clearly remains to be seen whether it gets the sort 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 previous primary executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he states UK firms must approach the market carefully, selecting partners with caution and preventing mistakes that could result in regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm unsure whether it is an opportunity for business," he says. "It actually depends on the result of [state] legislation and how the organization operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to gather a portion of earnings as an "stability fee".

International companies deal with the included difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are seeking to defend their turf.

Analysts state UK firms will require to strike collaborations, using their proficiency and technology in order to make inroads.

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

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

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

The business has actually been purchasing the US market considering that 2011, when it purchased three US companies to develop an existence in Nevada.

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

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

Mr Asher stated William Hill has ended up being a family name in Nevada however that's not necessarily the goal all over.

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

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

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