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UK wagering companies gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

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

The changes are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow 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 expert David Jennings, who heads leisure research at Davy.

For UK firms, which are facing combination, increased online competition and from UK regulators, the timing is particularly appropriate.

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But the market states depending 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 truly focusing on, but equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.

'Take some 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.

Firms are wishing to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

The ruling discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local lawmakers.

That is expected to cause considerable variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

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

"There was a great deal 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 taking a look at this as, 'it's a chance but 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 wagering in some kind by 2023, creating a market with about $6bn in yearly profits.

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

US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.

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

States have also been sluggish to legalise numerous types of online gaming, despite a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting is generally viewed in its own category, "it plainly stays to be seen whether it gets the sort of momentum people believe 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 previous primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a consultant, he says UK firms ought to approach the market thoroughly, selecting partners with care and preventing missteps that might lead to regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is an opportunity for company," he says. "It really is reliant on the result of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which desire to collect a percentage of revenue as an "stability charge".

International business deal with the added difficulty of a powerful existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to defend their turf.

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

They indicate SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers 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 said.

'It will simply depend'

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

The company has actually been investing in the US market considering that 2011, when it purchased 3 US firms to establish an existence in Nevada.

William Hill now uses about 450 people in the US and has actually announced collaborations with casinos in Iowa and New Jersey.

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

Mr Asher said William Hill has actually become a family name in Nevada but that's not necessarily the objective all over.

"We definitely plan to have an extremely substantial brand name presence in New Jersey," he said. "In other states, it will just depend upon guideline and possibly who our regional partner is."

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

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