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UK wagering companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new rules on betting entered effect in Delaware, a small east coast state about 2 hours from Washington.

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

The modifications 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 wagering.

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

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

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

"It's something that we're really concentrating on, however equally we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming 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 disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.

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

That is expected to lead to significant variation in how firms 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 varieties from $4.2 bn to practically $20bn yearly depending upon factors like the number of states move 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 said: "I believe 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 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, developing a market with about $6bn in annual profits.

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

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

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

States have also been sluggish to legalise many forms of online betting, regardless of a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting wagering is typically viewed in its own category, "it plainly stays to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law professor 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 apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he states UK firms need to approach the marketplace carefully, choosing partners with care and avoiding errors that could result in regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which desire to gather a portion of profits as an "integrity cost".

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

Analysts state UK firms will require to strike collaborations, providing their know-how and technology in order to make inroads.

They point to SBTech's recent statement that it is providing technology 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, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.

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

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

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

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

"We definitely intend to have a very significant brand presence in New Jersey," he stated. "In other states, it will simply depend on policy and possibly who our local partner is."

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

More on this story

US ruling opens way for sports betting wagering

14 May 2018

Paddy Power buys fantasy sports betting site

23 May 2018

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