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UK sports betting firms bet on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new guidelines on wagering entered into impact in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

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

For UK companies, which are coming to grips with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially appropriate.

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But the market says relying on the US stays a dangerous bet, as UK companies deal with complex state-by-state policy and competitors from established regional interests.

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

'Require time'

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

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

The judgment 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 legislators.

That is anticipated to lead to significant variation in how firms get accredited, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the market.

Potential revenue varieties from $4.2 bn to almost $20bn every year depending on aspects like the number of states transfer 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 stated: "I think the majority of people ... 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 require time'."

'Remains to be seen"

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

But bookies deal with a far various 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 up until relatively recently.

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

States have actually also been slow to legalise numerous forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to remove barriers.

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

David Carruthers is the previous president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.

Now an expert, he says UK firms must approach the marketplace thoroughly, picking partners with caution and avoiding mistakes that might result in regulator reaction.

"This is a chance for the American sports betting bettor ... I'm not sure whether it is an opportunity for service," he states. "It truly depends on the result 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, along with demands by US sports betting leagues, which wish to collect a portion of profits as an "integrity cost".

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

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

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

"It will be a for everyone, 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 realities.

The company has been buying the US market because 2011, when it purchased three US companies to establish an existence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.

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

"We definitely mean to have a really substantial brand existence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."

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

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