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UK sports betting firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

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

The modifications are the first in what might end up being 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" chance to establish a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.

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

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But the industry states relying on the US remains a dangerous bet, as UK business deal with complex state-by-state policy and competition from entrenched local interests.

"It's something that we're actually concentrating on, however equally we do not desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, according to a report by Technavio, external published in January.
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Firms are intending to take advantage of 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 wagering.

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

That is expected to cause substantial variation in how companies get accredited, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential profits varieties from $4.2 bn to nearly $20bn every year depending on elements like how many states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be huge'", stated 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 but it's not going to be $20bn and it's going to be state by state and it's going to require time'."

to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly earnings.

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

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

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

States have also been slow to legalise lots of kinds of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting is generally viewed in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.

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

Now an expert, he says UK companies need to approach the market carefully, picking partners with care and avoiding mistakes that might 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 really is dependent on the result of [state] legislation and how business operators pursue the chance."
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'It will be collaborations'

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

International business face the added obstacle of a powerful existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to defend their turf.

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

They indicate SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.

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

'It will simply depend'

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

The company has actually been buying the US market because 2011, when it bought three US firms to develop an existence in Nevada.

William Hill now uses about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.

It works as threat manager for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.

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

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

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

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