UK sports betting firms 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 firms as sports betting starts to spread out in America.

From Tuesday, new guidelines on wagering entered result in Delaware, a small east coast state about 2 hours from Washington.

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

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

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

For UK companies, which are grappling with consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.

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But the industry states relying on the US stays a dangerous bet, as UK companies deal with complex state-by-state guideline and competition from entrenched regional interests.

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

'Take some time'

The US represented 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 hoping to take advantage of 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 ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to local legislators.

That is expected to cause 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 market.

Potential income ranges from $4.2 bn to practically $20bn yearly depending upon aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 research 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 consultants KPMG.

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

'Remains to be seen"

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

But bookmakers deal with a far various landscape in America than they do in the UK, where sports betting shops are a regular sight.

US laws restricted gambling mostly to Native American lands and Nevada's Las Vegas strip up until relatively just recently.

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

States have actually likewise been slow to legalise lots of types of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting wagering is normally seen in its own category, "it clearly remains to be seen whether it gets the type of momentum people believe 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 apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK firms must approach the market carefully, selecting partners with care and preventing errors that might cause regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm unsure whether it is a chance for business," he states. "It really depends on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to collect a portion of profits as an "integrity charge".

International companies face the added challenge of a powerful existing gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to safeguard their turf.

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

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

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

'It will simply depend'

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

The business has actually been buying the US market considering that 2011, when it acquired three US firms to establish an existence in Nevada.

William Hill now uses about 450 people 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 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 necessarily the objective all over.

"We certainly plan to have a very substantial brand presence in New Jersey," he said. "In other states, it will simply depend on guideline and potentially who our local partner is."

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

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