UK betting companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, brand-new guidelines on sports betting entered effect in Delaware, a tiny 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 first in what might become 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 establish a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are grappling with debt consolidation, increased online competition and harder rules from UK regulators, the timing is especially suitable.

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But the industry says counting on the US remains a risky bet, as UK companies face complex state-by-state policy and from established regional interests.

"It's something that we're really concentrating on, however equally we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income last year, according to a report by Technavio, external released in January.
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Firms are wanting to use more of that activity after last month's decision, which overruled a 1992 federal law that barred 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, leaving that question to regional lawmakers.

That is expected to cause substantial variation in how firms get licensed, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential earnings varieties from $4.2 bn to nearly $20bn every year depending on aspects like how lots of states move 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 consultants KPMG.

Now, he said: "I believe many people ... are taking a look 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in annual revenue.

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

US laws limited betting mainly to Native American lands and Nevada's Las Vegas strip until relatively just recently.
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In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
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States have actually likewise been sluggish to legalise numerous forms of online betting, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting is usually seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," said 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 detained 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 market thoroughly, choosing partners with care and avoiding errors that might lead to regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a percentage of earnings as an "integrity fee".

International companies deal with the included difficulty of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are seeking to defend their turf.

Analysts say UK companies will need to strike collaborations, using their expertise and innovation 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 type of deals likely to materialise.

"It will be a win-win for everybody, but it will be collaborations 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 truths.

The business has been buying the US market since 2011, when it bought 3 US companies to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has revealed partnerships with casinos in Iowa and New Jersey.
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It works as risk supervisor for the Delaware Lottery and has invested millions together with a regional developer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a household name in Nevada but that's not always the objective everywhere.

"We certainly mean to have an extremely substantial brand presence in New Jersey," he said. "In other states, it will simply depend upon policy and possibly who our local partner is."

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

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