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

From Tuesday, brand-new rules on sports betting entered into impact in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
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The changes 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 market sees a "when in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are coming to grips with combination, increased online competition and harder rules from UK regulators, the timing is especially opportune.

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But the market says counting on the US remains a dangerous bet, as UK business face complex state-by-state regulation and competitors from established local interests.

"It's something that we're really concentrating on, however equally we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.

'Take some time'

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

Firms are intending to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

The judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional lawmakers.

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

Potential revenue ranges from $4.2 bn to practically $20bn each year depending on elements like the number of states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think many 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'."
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'Remains to be seen"

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

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

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

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

States have also been slow to legalise lots of types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is normally seen in its own category, "it clearly stays to be seen whether it gets the type 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 chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he states UK companies should approach the market carefully, selecting partners with caution and avoiding missteps that might cause regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a portion of earnings as an "stability charge".
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International companies deal with the added obstacle of a powerful existing video gaming market, with casino operators, state-run lotteries and Native American people that are looking for to protect their turf.
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Analysts state UK companies will require to strike collaborations, providing their competence and innovation in order to make inroads.

They point to SBTech's current statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.

"It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The business has been buying the US market given that 2011, when it acquired 3 US firms to develop a presence 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 alongside a regional designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a household name in Nevada but that's not always the goal everywhere.

"We definitely mean to have an extremely significant brand name presence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our regional partner is."

"The US is going to be the biggest sports betting wagering market on the planet," he included. "Obviously that's not going to occur on day one."
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More on this story

US judgment opens way for sports betting

14 May 2018

Paddy Power purchases fantasy sports betting site

23 May 2018
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