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

5 June 2018
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By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new rules on sports betting came into result in Delaware, a small east coast state about two hours from Washington.

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

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

The market sees a "as soon as 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 study at Davy.

For UK companies, which are grappling with combination, increased online competitors and harder guidelines from UK regulators, the timing is particularly suitable.

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But the industry says relying on the US remains a risky bet, as UK companies face complex state-by-state policy and competition from established regional interests.

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

'Take some time'

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

Firms are hoping to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting wagering.

The judgment discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to local legislators.

That is expected to cause significant variation in how companies get certified, where sports betting wagering can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending upon aspects like how many states move to legalise, Oxford Economics in a 2017 research 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 experts KPMG.

Now, he stated: "I think a lot of individuals ... are taking a look 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 some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in yearly profits.

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

US laws restricted gambling mostly to Native American lands and Nevada's Las Vegas strip up until 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 many kinds of online sports betting, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.

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

David Carruthers is the previous president of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he says UK companies should approach the marketplace carefully, choosing partners with care and avoiding errors that might cause regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a percentage of revenue as an "stability charge".

International business face the included difficulty of a powerful existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to defend their turf.

Analysts say UK firms will need to strike collaborations, offering their knowledge and innovation in order to make inroads.

They indicate SBTech's recent statement that it is providing 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 everyone, but it will be partnerships 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 actually been purchasing the US market given that 2011, when it acquired 3 US companies to develop an existence in Nevada.

William Hill now utilizes about 450 people in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.

It works as danger manager for the Delaware Lottery and has invested millions along with a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a home name in Nevada however that's not necessarily the objective everywhere.

"We definitely intend to have a really considerable brand existence in New Jersey," he stated. "In other states, it will simply depend upon policy and potentially who our regional partner is."

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

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