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UK wagering companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

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

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

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

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

For UK companies, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly suitable.
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But the market says depending on the US remains a dangerous bet, as UK companies deal with complicated state-by-state policy and competitors from entrenched regional interests.

"It's something that we're truly focusing on, however equally we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.

'Require time'

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

Firms are hoping to tap into more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.

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

That is anticipated to cause substantial variation in how firms get licensed, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the market.

Potential revenue varieties from $4.2 bn to practically $20bn yearly depending on factors like the number of states transfer 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 said: "I believe many people ... are looking at this as, 'it's a chance 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, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in yearly income.

But bookmakers deal with a far various landscape in America than they carry out in the UK, where wagering stores are a frequent sight.
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US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip till relatively recently.

In the popular creativity, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
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States have actually also been slow to legalise lots of types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to remove barriers.

While sports betting is usually seen in its own classification, "it clearly stays to be seen whether it gets the sort of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.

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

Now a specialist, he states UK companies must approach the marketplace thoroughly, picking partners with caution and avoiding errors that could cause regulator reaction.

"This is a chance for the American sports betting ... I'm not exactly sure whether it is a chance for organization," he says. "It really depends on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to gather a percentage of revenue as an "stability fee".

International business deal with the added obstacle of a powerful existing gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their grass.

Analysts say UK companies will need to strike partnerships, offering their know-how and innovation in order to make inroads.

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

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

'It will just depend'

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

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

William Hill now employs about 450 people in the US and has revealed collaborations with gambling establishments in Iowa and New Jersey.

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

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

"We certainly intend to have a very significant brand existence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our local partner is."

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

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