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UK sports betting companies gamble on US after sports betting wager judgment

5 June 2018
bit.ly
By Natalie Sherman

Business reporter, New york city

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

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

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

The modifications are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

The industry sees a "as soon as in a generation" opportunity to develop a 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 combination, increased online competition and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the industry states counting on the US remains a dangerous bet, as UK companies face complicated state-by-state guideline and competition from entrenched local interests.

"It's something that we're actually focusing on, but equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.

'Take some time'

The US accounted for about 23% of the $244bn (₤ 182bn) in video gaming revenue last year, according to a report by Technavio, external published in January.

Firms are intending to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.

The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional lawmakers.

That is anticipated to result in considerable variation in how firms get accredited, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential income ranges from $4.2 bn to almost $20bn every year depending upon elements like how many states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think 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 take 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, producing a market with about $6bn in yearly profits.

But bookmakers deal with a far different landscape in America than they carry out in the UK, where wagering stores are a regular sight.

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

In the popular imagination, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
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States have also been slow to legalise numerous types of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

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

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

Now an expert, he states UK companies must approach the market carefully, choosing partners with care and avoiding mistakes that could 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 says. "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 companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a percentage of earnings as an "integrity cost".

International business face the added difficulty of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to protect their grass.

Analysts say UK companies will require to strike partnerships, providing their expertise and technology in order to make inroads.

They indicate SBTech's recent statement that it is supplying technology 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 everyone, but 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 been purchasing the US market considering that 2011, when it bought three US companies to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has announced collaborations with casinos in Iowa and New Jersey.

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

Mr Asher said William Hill has ended up being a family name in Nevada but that's not always the objective everywhere.

"We certainly plan to have a really substantial brand existence in New Jersey," he said. "In other states, it will just depend on policy and potentially who our regional partner is."

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

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