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UK sports betting companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new rules on wagering entered into result in Delaware, a tiny 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 become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

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

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

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But the industry says depending on the US stays a dangerous bet, as UK companies deal with complex state-by-state policy and competition from established local interests.

"It's something that we're actually focusing on, but similarly we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Take some 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 released in January.

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

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

That is anticipated to cause significant variation in how firms get accredited, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the market.
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Potential revenue ranges from $4.2 bn to nearly $20bn every year depending on 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 substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
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Now, he said: "I believe the majority of people ... are taking a look at this as, 'it's an opportunity however it's not going to be $20bn and it's going to be state by state and it's going to require time'."
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'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, creating a market with about $6bn in annual income.

But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.

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

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

States have likewise been sluggish to legalise numerous kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to remove obstacles.

While sports betting wagering is typically seen in its own classification, "it clearly remains to be seen whether it gets the kind of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now an expert, he says UK companies ought to approach the marketplace thoroughly, selecting partners with care and preventing bad moves that could cause regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is a chance for company," he says. "It actually is dependent on the result of [state] and how the service operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to gather a portion of profits as an "integrity charge".

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

Analysts say UK companies will require to strike collaborations, offering their expertise and innovation in order to make inroads.
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They indicate SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

"It will be a win-win for everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The company has been buying the US market given that 2011, when it purchased three US firms to develop an existence in Nevada.

William Hill now uses about 450 individuals 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 along with 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 all over.

"We definitely plan to have a very significant brand name presence in New Jersey," he stated. "In other states, it will just depend upon guideline and possibly who our local partner is."

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

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