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UK wagering firms bet on US after sports betting wager ruling
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5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new guidelines on sports betting entered impact in Delaware, a small east coast state about 2 hours from Washington.
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Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

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

The industry sees a "once in a generation" opportunity to develop a brand-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 coming to grips with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.

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But the industry says relying on the US stays a risky bet, as UK companies face complex state-by-state guideline and competitors from established local interests.

"It's something that we're actually concentrating on, however equally we don't wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
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'Require time'

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

Firms are wishing to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a couple of 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 legislators.

That is anticipated to cause substantial variation in how firms get accredited, where sports betting wagering can take place, and which occasions are open to speculation - with big ramifications for the size of the market.

Potential revenue ranges from $4.2 bn to practically $20bn each year depending on elements like how many states move 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 big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I think the majority of people ... are taking a look at this as, 'it's an opportunity however 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in yearly profits.

But bookmakers face a far various landscape in America than they do in the UK, where wagering stores are a regular sight.

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

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

States have also been slow to legalise lots of types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.

While sports betting is typically viewed in its own classification, "it clearly remains to be seen whether it gets the type 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 former president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a consultant, he says UK companies need to approach the market thoroughly, picking partners with caution and avoiding missteps that could cause regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is an for company," he says. "It really depends on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to gather a percentage of earnings as an "stability fee".

International companies deal with the added challenge of an effective existing gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are seeking to safeguard their turf.

Analysts state UK firms will need to strike collaborations, offering their know-how and technology in order to make inroads.

They point to SBTech's recent announcement that it is supplying technology 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 everybody, however it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The business has been buying the US market given that 2011, when it purchased 3 US firms to develop a presence in Nevada.
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William Hill now employs about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

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

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

"We definitely intend to have an extremely substantial brand presence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."

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

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