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UK wagering companies bet 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 out in America.

From Tuesday, brand-new guidelines on sports betting entered effect 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 changes are the first in what could 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 "once in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are facing combination, increased online competition and harder rules from UK regulators, the timing is especially opportune.
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But the market states relying on the US stays a dangerous bet, as UK business deal with complicated state-by-state policy and competition from established local interests.

"It's something that we're actually focusing on, but similarly we don't desire to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Require 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 released in January.

Firms are hoping to tap into 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 found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to local legislators.

That is expected to cause significant variation in how firms get accredited, where sports betting can happen, and which are open to speculation - with huge implications for the size of the marketplace.

Potential earnings varieties from $4.2 bn to practically $20bn each year depending on factors like how lots of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I believe the majority of people ... are looking 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 require time'."

'Remains to be seen"

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

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

US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

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

States have also been sluggish to legalise lots of types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting wagering is normally viewed in its own category, "it clearly stays to be seen whether it gets the kind of momentum individuals think 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 arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK firms need to approach the market thoroughly, choosing partners with caution and avoiding bad moves that might cause regulator backlash.

"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for service," he states. "It truly is dependent on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to collect a portion of profits as an "integrity cost".

International business deal with the included challenge of an effective existing gaming industry, with casino operators, state-run lottos and Native American people that are looking for to defend their turf.

Analysts say UK firms will require to strike collaborations, using their know-how and innovation in order to make inroads.

They point to SBTech's recent statement that it is providing 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, however it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has actually been buying the US market since 2011, when it bought 3 US companies to develop a presence in Nevada.
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William Hill now utilizes about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

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

Mr Asher stated William Hill has ended up being a home name in Nevada however that's not always the objective all over.

"We certainly plan to have a really considerable brand name existence in New Jersey," he stated. "In other states, it will just depend on policy and possibly who our regional partner is."

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

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