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

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new guidelines on betting came into 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 changes 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 permit sports betting.

The market sees a "when in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who research at Davy.

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

Why the sports betting market faces an unsure future

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But the industry says relying on the US stays a risky bet, as UK companies face complex state-by-state guideline and competition from established regional interests.

"It's something that we're truly focusing on, but equally we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Require time'
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The US represented about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, 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 struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.

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

That is anticipated to result in significant variation in how companies get certified, where sports betting wagering can occur, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential profits ranges from $4.2 bn to practically $20bn every year depending upon elements like the number of states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe the majority of individuals ... are taking a look at this as, 'it's a chance however 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, forecasts that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in yearly income.

But bookies face 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 until reasonably just recently.

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

States have actually also been sluggish to legalise many forms of online gambling, in spite of a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting wagering is generally seen in its own classification, "it clearly stays 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 wagering policy.

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

Now a consultant, he states UK firms need to approach the market thoroughly, choosing partners with caution and avoiding errors that might result in regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which desire to gather a percentage of income as an "integrity fee".

International companies deal with the included obstacle of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

Analysts state UK companies will need to strike collaborations, offering their know-how and technology in order to make inroads.
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They point to SBTech's recent announcement that it is offering 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, however it will be partnerships 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 realities.

The business has actually been buying the US market given that 2011, when it bought three US firms to develop a presence in Nevada.

William Hill now employs about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has invested millions together with a local designer 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 certainly intend to have a very considerable brand name presence in New Jersey," he stated. "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 on the planet," he added. "Obviously that's not going to happen on the first day."

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