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UK sports betting firms bet on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

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

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

The changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

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

For UK firms, which are facing consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.

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But the industry says counting on the US remains a risky bet, as UK business deal with complex state-by-state guideline and competition from entrenched regional interests.

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

'Take time'

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

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

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

That is anticipated to cause considerable variation in how companies get accredited, where sports betting can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to practically $20bn each year depending upon elements like the number of states relocate 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'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I think 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 take time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in yearly profits.

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

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

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

States have also been sluggish to legalise lots of types of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting wagering is usually viewed in its own category, "it plainly remains to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.

David Carruthers is the former president of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK companies must approach the market thoroughly, choosing partners with caution and preventing errors that might cause regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for company," 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 starts, sports betting firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to gather a percentage of revenue as an "stability cost".

International companies face the added difficulty of an effective existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to defend their grass.

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

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

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

'It will just depend'

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

The business has actually been buying the US market since 2011, when it acquired 3 US companies to establish a presence in Nevada.

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

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

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

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

"The US is going to be the biggest sports betting market worldwide," he added. "Obviously that's not going to occur on day one."

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