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UK sports betting firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on sports betting came into impact in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey could begin 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 method for states to allow sports betting.

The market sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

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

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But the market says relying on the US remains a risky bet, as UK business face complex state-by-state policy and competitors from entrenched local interests.

"It's something that we're really focusing on, but similarly we don't wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.

'Take time'

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

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

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 local lawmakers.

That is expected to lead to considerable variation in how firms get accredited, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the market.
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Potential revenue varieties from $4.2 bn to practically $20bn annually depending on elements like the number of 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 specialists KPMG.

Now, he stated: "I believe a lot 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 take some time'."

'Remains to be seen"

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

But bookies face a far various landscape in America than they carry out in the UK, where sports betting shops are a frequent sight.

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip till relatively just recently.
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In the popular creativity, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.

States have actually likewise been sluggish to legalise numerous forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting wagering is generally seen in its own classification, "it plainly stays to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.

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 an expert, he says UK firms should approach the market carefully, choosing partners with care 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 company," he states. "It actually depends on the result of [state] legislation and how the organization operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which want to collect a portion of earnings as an "stability charge".

International business face the included obstacle of a powerful existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their turf.

Analysts state UK companies will need to strike collaborations, providing their expertise and innovation in order to make inroads.

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

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

'It will simply depend'

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

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

William Hill now employs about 450 people in the US and has revealed partnerships with casinos in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.

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

"We certainly plan to have an extremely significant brand existence in New Jersey," he stated. "In other states, it will simply depend upon regulation and possibly who our is."

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

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