UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on sports betting came into result in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey could begin 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 enable sports betting.

The industry sees a "once in a generation" opportunity 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 coming to grips with consolidation, competition and tougher guidelines from UK regulators, the timing is especially appropriate.
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But the industry states depending on the US remains a dangerous bet, as UK business face complicated state-by-state regulation and competition from established regional interests.

"It's something that we're actually focusing on, but similarly we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.

'Take time'

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

Firms are wishing to tap into more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.

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 regional lawmakers.

That is expected to lead to significant 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 income varieties from $4.2 bn to practically $20bn yearly depending on elements like how many 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 substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.
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Now, he stated: "I think the majority of 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 some time'."

'Remains to be seen"
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Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in yearly income.
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But bookmakers face a far various landscape in America than they perform in the UK, where wagering shops are a frequent sight.

US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip 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 likewise been sluggish to legalise lots of kinds of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

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

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

Now a consultant, he states UK firms should approach the marketplace thoroughly, choosing partners with caution and preventing missteps that could cause regulator reaction.

"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is a chance for service," he states. "It really is reliant on the result of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

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 gather a percentage of profits as an "stability charge".

International business face the included difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are seeking to safeguard their turf.

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

They indicate SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the sort 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 said.

'It will simply depend'
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Joe Asher, president at William Hill US, is clear-eyed about the truths.

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

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

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

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

"We certainly intend to have an extremely substantial brand existence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our regional partner is."

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

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