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

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on entered into impact 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 modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.

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

For UK companies, which are coming to grips with combination, increased online competitors and harder rules from UK regulators, the timing is particularly suitable.

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But the industry states relying on the US remains a dangerous bet, as UK business face complicated state-by-state guideline and competitors from entrenched local interests.
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"It's something that we're truly concentrating on, however similarly we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

'Take time'

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

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

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

That is anticipated to lead to significant variation in how companies get certified, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the market.

Potential revenue ranges from $4.2 bn to nearly $20bn every year depending on elements like how many states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants 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, handling 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 annual revenue.

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

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

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

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

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

David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.
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Now a specialist, he says UK firms must approach the market thoroughly, selecting partners with caution and preventing errors that might result in regulator reaction.

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

'It will be collaborations'

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

International business deal with the included difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to protect their turf.

Analysts say UK firms will require to strike partnerships, providing their knowledge 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 type 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 said.

'It will just depend'

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

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

William Hill now employs about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has invested millions together with a regional designer 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 always the goal everywhere.

"We definitely mean to have an extremely considerable brand name presence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our regional partner is."
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"The US is going to be the greatest sports betting wagering market in the world," he added. "Obviously that's not going to occur on day one."
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