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UK betting companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

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

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

The industry sees a "when in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.
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But the industry says counting on the US remains a risky bet, as UK business deal with complex state-by-state guideline and competitors from entrenched regional interests.

"It's something that we're actually concentrating on, however similarly we don't want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.

'Take time'

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

Firms are wanting 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 few others from authorising sports betting wagering.

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

That is expected to lead to significant variation in how companies get licensed, where sports betting wagering 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 every year depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think many 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 in some type 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 wagering stores are a regular sight.

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip up until fairly recently.
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In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.

States have likewise been sluggish to legalise numerous kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting wagering is normally viewed in its own category, "it plainly remains to be seen whether it gets the type of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

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

Now a consultant, he states UK companies must approach the market carefully, selecting partners with care and avoiding missteps that could result in regulator reaction.

"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is a chance for business," he says. "It actually depends on the outcome of [state] legislation and how the service operators pursue the chance."

'It will be collaborations'
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As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to gather a percentage of earnings as an "stability cost".

International companies deal with the included obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are seeking to defend their grass.

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

They indicate SBTech's current statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.

"It will be a win-win for everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

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

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

It works as threat manager for the Delaware Lottery and has invested millions along with a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a household name in Nevada however that's not necessarily the goal 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 possibly who our regional partner is."

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

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