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

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

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

The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method 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 study at Davy.

For UK companies, which are grappling with debt consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly opportune.

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But the market states depending on the US remains a dangerous bet, as UK companies deal with complex state-by-state policy and competition from entrenched regional interests.

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

'Require time'
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The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income last year, according to a report by Technavio, external released in January.

Firms are hoping to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to regional lawmakers.
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That is anticipated to result in significant 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 marketplace.

Potential profits varieties from $4.2 bn to almost $20bn every year depending upon like the number of states move 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 huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe the majority of people ... are looking at this as, 'it's an opportunity 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual income.

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

US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip till reasonably recently.

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

States have also been slow to legalise numerous types of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting is generally viewed in its own category, "it plainly remains 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 former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he says UK companies need to approach the marketplace thoroughly, choosing partners with care and preventing errors that might lead to regulator reaction.

"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for business," he states. "It actually depends on the outcome of [state] legislation and how the company operators pursue the opportunity."

'It will be partnerships'

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

International companies face the included challenge of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to protect their grass.

Analysts say UK firms will need to strike partnerships, offering their expertise and innovation in order to make inroads.

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

"It will be a win-win for everyone, but it will be partnerships 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 truths.

The business has actually been purchasing the US market because 2011, when it acquired 3 US firms to establish an existence in Nevada.

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

It works as danger manager for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.

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

"We definitely mean to have an extremely substantial brand presence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our local partner is."

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

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