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UK wagering companies gamble on US after sports betting wager judgment
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5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

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

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

The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

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

For UK firms, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.

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But the industry states depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competitors from established local interests.

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

'Take time'

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

Firms are wanting to take advantage of more of that activity after last month's decision, 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 in fact legalise sports betting wagering, that concern to regional legislators.

That is expected to result in substantial variation in how firms get accredited, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential profits varieties from $4.2 bn to practically $20bn each year depending on aspects like how many states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe the majority of 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in yearly earnings.

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

US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.

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

States have actually also been slow to legalise numerous types of online gambling, in spite of a 2011 Justice Department opinion that appeared to get rid of obstacles.

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

David Carruthers is the former chief executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he says UK companies should approach the market thoroughly, picking partners with caution and preventing mistakes that might result in regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm unsure whether it is a chance for business," he says. "It actually is reliant on the outcome of [state] legislation and how the service operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a percentage of profits as an "stability charge".

International business face the added obstacle of an effective existing gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to safeguard their turf.

Analysts state UK companies will need to strike partnerships, providing their know-how and technology in order to make inroads.

They point to SBTech's recent announcement that it is providing 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 collaborations and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The business has actually been buying the US market given that 2011, when it acquired 3 US companies to establish an existence in Nevada.

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

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

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

"We certainly plan to have an extremely considerable brand name presence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our regional partner is."

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

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