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UK wagering companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city
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It's high stakes for UK companies as sports betting starts to spread in America.

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

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

The changes are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.

The industry sees a "when in a generation" chance to develop a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with combination, increased online competitors and harder rules from UK regulators, the timing is especially opportune.

Why the betting market deals with an unsure future

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

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

'Take some time'

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

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

The the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that question to local legislators.

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

Potential revenue varieties from $4.2 bn to practically $20bn yearly depending on aspects like how numerous states transfer 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 huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think a lot of individuals ... 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 take time'."

'Remains to be seen"
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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 income.

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

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip up until relatively just recently.

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

States have actually also been slow to legalise numerous kinds of online betting, despite a 2011 Justice Department viewpoint that appeared to get rid of obstacles.
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While sports betting wagering is usually viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

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

Now a consultant, he states UK firms should approach the marketplace carefully, selecting partners with care and preventing bad moves that could lead to regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for company," he states. "It actually is reliant on the result of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a portion of revenue as an "integrity charge".

International companies face the added obstacle of an effective existing video gaming market, with gambling establishment operators, state-run lottos and Native American people that are seeking to protect their turf.

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

They indicate SBTech's current 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, however it will be partnerships and it will be driven by technology," Mr Hawkley said.
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'It will just depend'

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

The company has been purchasing the US market since 2011, when it purchased three US firms to establish a presence 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 risk supervisor for the Delaware Lottery and has invested millions together with a local developer in a New Jersey horse racing track.

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

"We certainly plan to have an extremely substantial brand name existence in New Jersey," he stated. "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 wagering market worldwide," he included. "Obviously that's not going to occur on day one."

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