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UK sports betting companies gamble on US after sports betting wager ruling
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5 June 2018

By Natalie Sherman
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Business press reporter, New York

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

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

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

The modifications are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The market sees a "once 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 coming to grips with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the market states relying on the US remains a dangerous bet, as UK business deal with complex state-by-state policy and competition from entrenched local interests.

"It's something that we're truly concentrating on, however equally we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits last year, 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 overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.

The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to regional lawmakers.

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

Potential profits varieties from $4.2 bn to nearly $20bn every year depending upon aspects like the number of states move 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'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe many people ... are looking at this as, 'it's an opportunity 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, anticipates that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual earnings.

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

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

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

States have also been slow to legalise lots of kinds of online gambling, regardless of a 2011 Justice Department opinion that appeared to remove challenges.

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

David Carruthers is the former president 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 ought to approach the market thoroughly, picking partners with caution and avoiding bad moves that might lead to regulator reaction.
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"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is a chance for organization," he says. "It truly is on the result of [state] legislation and how the service operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to collect a portion of revenue as an "stability fee".

International business face the added challenge of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to defend their grass.

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

They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
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"It will be a win-win for everyone, however it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

The company has been investing in the US market given that 2011, when it acquired three US firms to establish a presence in Nevada.

William Hill now uses about 450 individuals in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

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

Mr Asher stated William Hill has become a family name in Nevada however that's not necessarily the goal everywhere.

"We definitely intend to have a really considerable brand name presence 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 happen on the first day."

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