UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new rules on wagering entered effect in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
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The 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 "once in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

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

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But the industry states relying on the US remains a dangerous bet, as UK business face complicated state-by-state regulation and competitors from entrenched local interests.

"It's something that we're actually focusing on, however equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming profits in 2015, according to a report by Technavio, external published in January.

Firms are hoping 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 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 regional legislators.

That is anticipated to lead to substantial variation in how firms get accredited, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the market.
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Potential revenue ranges from $4.2 bn to nearly $20bn every year depending upon elements 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'", said Will Hawkley, London-based head of leisure for experts 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 take some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in yearly profits.

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

US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.

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

States have likewise been sluggish to legalise many kinds of online gambling, despite a 2011 Justice Department opinion that appeared to remove barriers.

While sports betting wagering is typically viewed in its own category, "it clearly remains to be seen whether it gets the type of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he states UK companies need to approach the market thoroughly, choosing partners with caution and preventing errors that might result in regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of income as an "stability fee".

International companies deal with the included challenge of an effective existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to defend their turf.

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

They indicate SBTech's current announcement that it is supplying innovation 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 collaborations and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has been investing in the US market considering that 2011, when it acquired three US firms to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has invested millions together with a local developer in a New Jersey horse racing track.
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Mr Asher stated William Hill has become a family name in Nevada however that's not always the objective everywhere.

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

"The US is going to be the most significant sports betting market on the planet," he included. "Obviously that's not going to occur on day one."

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