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UK sports betting 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 starts to spread in America.

From Tuesday, brand-new guidelines on wagering entered impact 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 could become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.

The market sees a "once in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK firms, which are facing debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially appropriate.

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But the industry says counting on the US stays a risky bet, as UK companies deal with complicated state-by-state guideline and competition from entrenched regional interests.

"It's something that we're actually concentrating on, but similarly we don't desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.

'Take time'

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

Firms are intending to use more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.

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

That is anticipated to lead to substantial variation in how companies get licensed, where sports betting can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential income ranges from $4.2 bn to almost $20bn yearly depending upon factors like the number of states relocate to legalise, Oxford Economics estimated 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 consultants 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 take some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in annual earnings.

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

US laws restricted sports betting mainly to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have actually also been slow to legalise many kinds of online gaming, regardless of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is normally seen in its own category, "it remains to be seen whether it gets the type of momentum individuals think 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 chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK firms should approach the marketplace carefully, choosing partners with care and preventing mistakes that might result in regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to gather a portion of income as an "integrity cost".

International companies deal with the included challenge of an effective existing video gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to safeguard their turf.

Analysts state UK companies will require to strike collaborations, offering their knowledge and technology in order to make inroads.

They point to SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

"It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The company has been investing in the US market given that 2011, when it acquired 3 US companies to develop a presence in Nevada.

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

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

Mr Asher stated William Hill has actually ended up being a household name in Nevada but that's not necessarily the goal everywhere.

"We definitely mean to have a really considerable brand name presence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our regional partner is."

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

More on this story

US ruling opens method for sports betting wagering

14 May 2018

Paddy Power purchases fantasy sports betting site

23 May 2018

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