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 starts to spread in America.

From Tuesday, new rules on sports betting came into effect in Delaware, a tiny east coast state about two hours from Washington.

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

The changes 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 enable sports betting wagering.

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

For UK companies, which are coming to grips with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially opportune.

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But the market states counting on the US stays a risky bet, as UK business face complicated state-by-state guideline and competitors from established local interests.

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

'Take some time'

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

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

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

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

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending on aspects 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 big'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe most 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 take time'."

'Remains to be seen"

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

But bookies deal with a far various landscape in America than they carry out in the UK, where wagering stores are a regular sight.

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

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

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

While sports betting wagering is normally seen in its own category, "it plainly remains to be seen whether it gets the kind of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now a consultant, he says UK companies must approach the marketplace carefully, selecting partners with caution and preventing errors that could result in regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for company," he says. "It truly depends on the result of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of earnings as an "integrity charge".

International business face the included difficulty of a powerful existing gaming market, with casino operators, state-run lottery games and Native American people that are seeking to safeguard their turf.

Analysts say UK companies will need to strike collaborations, using their knowledge and innovation in order to make inroads.

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

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

'It will simply depend'

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

The business has actually been investing in the US market considering that 2011, when it acquired 3 US firms to establish a presence in Nevada.

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

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

Mr Asher said William Hill has ended up being a household name in Nevada but that's not necessarily the goal everywhere.

"We certainly plan to have a really considerable brand name existence in New Jersey," he stated. "In other states, it will simply depend upon guideline and potentially who our regional partner is."

"The US is going to be the greatest sports betting market on the planet," he added. "Obviously that's not going to happen on the first day."

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