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UK wagering firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on sports betting came into impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey might start 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 enable sports betting.

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

For UK firms, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially suitable.

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But the industry says depending on the US remains a risky bet, as UK business deal with complex state-by-state policy and competitors from established regional interests.

"It's something that we're really focusing on, however similarly we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.

'Take time'

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

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

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

That is anticipated to cause substantial variation in how companies get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the market.

Potential profits ranges from $4.2 bn to practically $20bn annually depending upon elements like the number of states transfer 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'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think the majority of people ... are looking at this as, 'it's a chance but 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, predicts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in annual profits.

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

US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

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

States have actually also been slow to legalise numerous kinds of online gambling, regardless of a 2011 Justice Department opinion that appeared to remove obstacles.

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

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

Now an expert, he says UK firms should approach the marketplace carefully, picking partners with care and avoiding mistakes that could lead to regulator reaction.

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

'It will be partnerships'

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

International business deal with the included challenge of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to protect their turf.

Analysts say UK firms will require to strike collaborations, offering their competence 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 type of deals likely to materialise.

"It will be a win-win for everyone, 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 truths.

The company has been investing in the US market considering that 2011, when it purchased 3 US firms to establish a presence in Nevada.

William Hill now employs 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 actually invested millions alongside a regional developer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a family name in Nevada but that's not always the objective everywhere.

"We certainly intend to have a really substantial brand existence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our local partner is."

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

More on this story

US judgment opens method for sports betting wagering

14 May 2018

Paddy Power purchases fantasy sports betting site

23 May 2018

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