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UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city
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It's high stakes for UK companies as sports betting wagering starts to spread out in America.

From Tuesday, brand-new guidelines on sports betting entered effect 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 first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The industry sees a "as soon as in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who research study at Davy.

For UK companies, which are grappling with debt consolidation, increased online competition and harder rules from UK regulators, the timing is especially suitable.

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But the market states depending on the US remains a dangerous bet, as UK companies deal with complicated state-by-state regulation and competition from established local interests.

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

'Take some 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 released in January.

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

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

That is expected to lead to substantial variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential profits ranges from $4.2 bn to practically $20bn annually depending on factors like how many states relocate 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'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe many people ... are looking 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 take time'."

'Remains to be seen"

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

But bookies face a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.

US laws limited sports betting mostly to Native American lands and Nevada's Las Vegas strip until relatively just recently.

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

States have actually also been sluggish to legalise numerous forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting wagering is typically viewed in its own category, "it clearly stays 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 regulation.

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

Now a consultant, he says UK firms ought to approach the marketplace thoroughly, picking partners with care and avoiding errors that could result in regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which want to collect a portion of revenue as an "integrity charge".

International companies face the added challenge of an effective existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are looking for to protect their turf.

Analysts say UK companies will need to strike partnerships, offering their knowledge and technology in order to make inroads.

They indicate SBTech's current statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.
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"It will be a win-win for everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The company has been purchasing the US market given 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 partnerships with gambling establishments in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.
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Mr Asher said William Hill has actually become a household name in Nevada however that's not always the goal everywhere.

"We definitely intend to have a really significant brand presence in New Jersey," he stated. "In other states, it will just depend upon guideline and potentially 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 occur on day one."

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