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UK wagering firms 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 companies as sports betting wagering starts to spread in America.

From Tuesday, new rules on betting entered impact in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey could start accepting sports betting bets as early as Friday.

The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

The market sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
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For UK companies, which are grappling with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the market states relying on the US remains a dangerous bet, as UK business face complex state-by-state policy and competition from established regional interests.

"It's something that we're really focusing on, but similarly we do not desire to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.

'Take time'

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

Firms are wishing to use 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 in fact legalise sports betting, leaving that question to regional lawmakers.

That is expected to result in in how firms get certified, where sports betting wagering can take place, and which occasions are open to speculation - with big implications for the size of the market.

Potential revenue ranges from $4.2 bn to almost $20bn each year depending upon elements like how many states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal 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 take time'."

'Remains to be seen"

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

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

US laws limited betting mostly to Native American lands and Nevada's Las Vegas strip till fairly recently.

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

States have actually likewise been sluggish to legalise lots of forms of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.

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

Now a specialist, he says UK firms must approach the marketplace thoroughly, selecting partners with care and avoiding errors that could lead to regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is an opportunity for business," he states. "It really depends on the outcome of [state] legislation and how business operators pursue the opportunity."
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'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which want to gather a portion of income as an "stability charge".

International business face the included difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to safeguard their grass.

Analysts say UK firms will need to strike partnerships, providing their knowledge 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 sort of deals likely to materialise.
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"It will be a win-win for everyone, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'
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Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.

The business has been purchasing the US market because 2011, when it acquired three US companies to develop a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.

It works as risk supervisor 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 become a home name in Nevada but that's not necessarily the objective all over.

"We certainly intend to have a really substantial brand presence in New Jersey," he stated. "In other states, it will just depend on regulation and possibly who our local partner is."

"The US is going to be the most significant sports betting wagering market worldwide," he added. "Obviously that's not going to happen on the first day."

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